69th International Retail Summit: The most important Take-Aways

10.09.2019

Why do big players like Amazon fail in the Chinese market? Where does a human workforce create added value for customers? How can stationary retail continue to function in the future? - These were questions asked by retail experts at GDI’s 69th International Retail Summit. The most important points in brief.

IHT Png

David Bosshart, CEO, GDI Gottlieb Duttweiler Institute
"If machines become more and more human-like, at some point people will become more machine-like."

The pressure to become more efficient, to implement new technologies faster and better is increasing everywhere. Never before have the four largest technology companies had such an impact on other companies. Over the past decade, the profile of each retailer has declined. It is becoming increasingly difficult to position oneself in this ecosystem. Today, price is no longer the determining factor; price, performance, and convenience collectively  determine a company's success. This requires more and better trained personnel as well as higher investments in design, IT, logistics, and "feel good" (e.g. larger parking spaces). New tools help to analyse consumer purchasing behaviour more precisely. In addition to the technological level, real estate continues to play a central role in retail. On one hand, there is the question of how space should be used; on the other, who owns it. It is still a question of occupying good locations, because they remain limited. A company's success is determined by its mastery of land and concrete (real estate industry) or that of platform and cloud. Automation is another future-oriented development. The question here must always be: Where does a human workforce create added value for customers?

 

Jeongwen Chiang, Professor of Marketing, China Europe International Business School CEIBS
"mCommerce and mPayments are no longer trends, they are ubiquitous characteristics of retail in China."

China has become the world's leading force in the digital economy. 42% of global e-commerce takes place here. This success is based on a gigantic purchasing power not limited to urban areas, that  includes rural areas, thanks to shopping and payment options via smartphone (mCommerce and mPayments) and the world's most efficient logistics system. Chinese consumer behaviour has changed, not least due to the prosperity of the younger generation, promoted by the one-child policy. Product and service requirements have increased, which has a positive effect on China's economic growth. Chinese consumers mainly use key opinion leaders (e.g. stars) in social media to determine  purchasing goals. . If you want to gain a foothold there as a foreign company, you have to deal with local conditions and adapt your concept and approach to the Chinese market. Specifically, this means rapid decision-making processes, adaptability, and in-depth understanding of the combination of O2O business (online to offline business) and social marketing.

 

Demna Gvasalia (CH), founder and Artistic Director, Vetements; Artistic Director, Balenciaga,
Hans Ulrich Obrist (CH), Artistic Director, Serpentine Galleries
"There should be an artist in residence in every company."

A constant examination of consumer mentality is fundamental in the fashion industry. Sustainability is more important today than ever. It changes how fashion is produced, but also impacts consumer behaviour. Artists – not only from the fashion world – offer different perspective through their work and way of thinking. This characteristic  makes them a valuable human resource in an entrepreneurial context. Every company, therefore, should have an artist on its premises.

 

Pauline Png (SG), NewGen Retail expert and former Managing Director, habitat by honestbee.
"We want to reduce the things you don’t like to do."

NewGen Retail deals with the question of how technology and convenience can be brought together. To create a holistic, multisensory and convenient shopping experience, the distinction between online and offline business – as well as online and offline customers – must be eliminated. Concepts must involve combining both experiences (O2O).

 

Olaf Schomaker (DE), Managing Director, Globus SB-Warenhaus Holding
"Our employees are our entrepreneurs."

As a retailer, you have to adapt to the respective context. The combination of digitisation and stationary retail will determine the success of a retail company in the future. Shopping must be simple and at the same time experience-oriented. What binds customers to the business is not digitisation, but rather local entrepreneurship. This can be promoted by hiring managers who deal with local companies, which requires clear back end processes and the opportunity to respond to customer needs through locality and individuality at the front end.

 

Rainer Deutschmann (CH), Head of Corporate Logistics Transportation Division of the Federation of Migros Cooperatives
"Logistics will be the key function of the future."

We live in the age of Everywhere-Commerce. Everything can be consumed everywhere, at any time, via any channel and in any form. Retailers are confronted with new requirements: they must be able to act faster, more flexibly and more precisely. Logistics plays a key role in this. The demand for transport services is individualised enormously by Everywhere-Commerce. How can a business  react to this? Either by continuing as before – for example,by increasing the truck fleet – or with a paradigm shift towards "more cooperation and even coopetition", which involves collaborating with different companies to optimise the flow of goods. 

 

Sarah-Diane Eck (FR), CEO and co-founder, Sandblock
"Relationship marketing was never built for consumer needs."

If you want to be successful with a B2C business, you have to attract the attention of your customers. However, attention is a product with limited availability, whose price is rising sharply. One consequence of this is that every company tries to attract attention and retain it  through a loyalty programme. The problem is that customers benefit little from it, often overwhelmed by a flood of mails. One possible solution to this problem is blockchain-based loyalty programs that are not tied to a company, are simple and compatible with mCommerce and trigger positive emotions. My company Sandblock, for example, offers a central loyalty program for several companies. Customers are rewarded with crypto currency instead of company-specific discounts or the like.

 

Götz Rehn (DE), Founder and Managing Director, Alnatura
"Sustainability is not only good for the earth, it's also good for your wallet."

In the last 30 years, CO2 emissions in Germany have increased by 67% - despite climate reports and declarations. This form of regulation does not bring us any further in terms of sustainability and cannot bring about any radical improvement. For real change, sustainability must be rethought. This works when instead of economic success, the focus is on people. The human being must not be understood as a being who uses his labour to increase yields, but as someone who can develop and serve nature in everything he does.

 

Mette Lykke (DK), CEO, Too Good To Go
"We produce food just to throw it away."

Today, about one third of the food produced ends up in waste. This corresponds to an annual value of 1.2 trillion US dollars and accounts for 8% of global CO2 emissions. Food waste can be reduced if the non-disposal of food creates added value for both producers and consumers. This is the case, for example, when producers use the "Too good too go" app to offer their unsold goods at a lower price in the evening and consumers can benefit from this offer.

 

Tom Szaky (US), co-founder and CEO, TerraCycle
"Why should consumers own something they do not want to own in the first place?"

With the purchase of a product, the packaging is also purchased and in most cases thrown away. A phenomenon of change towards a consumer society that began in the 1950s. Before that, packaging materials mostly belonged to the producers, e.g. the glass bottle to the milkman. "Loop" takes up this principle. Together with large groups from the food and cosmetics industries, the company has developed a sustainable packaging concept. Three aspects are central: Reusability, design and procurement material. The "Loop" target group is the average citizen. Accordingly, the marketing focus is on design aspects and easy handling. The return of empty product packaging is as simple as possible. Refilled products are delivered automatically.

 

Daniel Schunk (DE), Professor of Public and Behavioral Economics, Johannes Gutenberg University Mainz 
"The more self-regulated a person is, the more cooperative he is."

People think in two systems: a fast, intuitive and unconscious one and a slow, logical and conscious one. Most belong to the first group, so they tend to decide intuitively. This can lead to systematic decision-making errors. For example, we are too impatient or too afraid of losses. Self-regulation does not play a role here. Yet this ability - in addition to general digital and technical skills - is increasingly in demand in everyday work life. It is fundamental, for example, when independently familiarizing oneself with complex problems, but also when tasks have to be prioritized. Self-regulation can be learned, helps you to be more successful at work and makes you happy.

 

Hendrik Blijdenstein (CH), CCO, Digitec Galaxus 
"In our campaigns, we want to show not only a healthy world, but also an honest one."

Consistent customer orientation is fundamental in both classic retailing and e-commerce. A company should always ask itself not only what customers expect from it, but also what they value about it. In the case of Digitec Galaxus, these include the authenticity of the brand and personal customer contact. It is crucial to keep customers satisfied. This is achieved, for example, through attractive prices, personal, authentic content and constant interaction with customers. The success of Digitec Galaxus is based on four pillars: good category management; provocative marketing, which is not only advertising but also promotes dialogue between companies and customers; extensive logistics and planning expertise; and permanent system development, which not only shapes the IT department but the entire company. This requires a corporate culture of exchange and cooperation.

 

Olaf Koch (DE), Chairman of the Management Board, METRO
"It's no longer about dominance, it's about relevance: Focus is the principle of the hour."

E-commerce has become an enormous strength, but it is not only the digital sales side that is fundamentally changing commerce, but also the shift in power between customers and retailers. For retailers, the introduction of the iPhone meant that customers increasingly knew more - about prices, but also about products and product diversity as well as service quality. For retailers, this system is no longer about dominance, but about relevance. You can only achieve this if you understand what customers want. Customer relations are the decisive factor for the future success of a company. You can only build such a relationship if you decentralize, move to the local level and adapt your business to local conditions. METRO includes customers in its concept, e.g. offering them further training in the field of digitization. On the one hand, this creates customer proximity and ties and, on the other hand, facilitates cooperation with more know-how.

 

Johanna Jaskowska (FR), Digital Creative
"With one AR filter I've reached over 400 millions users on Instagram."

Through new technologies like Augmented Reality, things can be created in a virtual world that did not exist before, that could not be imagined or realized in the real world, e.g. new forms of clothing. In contrast to designer products in the "real" world, there is no copyright for digital-only products. The question is how to regulate "digital ownership" and who is the owner of what artists create on the Internet.

 

An Xiao Mina (US), affiliate researcher, Berkman Klein Center for Internet and Society, Harvard University
"We should extend our understanding of internet memes to including physical objects."

Electric scooters or selfie sticks look the same all over the world, but are not all built by the same manufacturer. It is a kind of globalized product, a "contagious object", a physical object that is shared online (e.g. as an image) and distributed via online and offline channels. Typically, such objects appear felt out of nowhere, go viral online and offline, are not distributed through any central company, and are quickly banned from the public by prohibitions or regulations. Contagious Objects are designed in such a way that people want to exchange information about them with their friends in networks. The technological requirements for Contagious Objects consist of production parts, in the case of the e-scooter e.g. a GPS, batteries and wheels; a production network, e.g. local app developers; and a distribution channel, e.g. a supplier of city tours. This path from idea to implementation has become shorter, faster and less complicated as a result of digitization, which promotes creative processes ("networked creativity").

 

David Bosshart (CH), CEO, Gottlieb Duttweiler Institute, 
Stephan Fetsch (DE), Partner, Deal Advisory-Valuation, EMA Head of Retail, KPMG
"Three revolutions make retail superfluous in its present form: Data Revolution, Consumer Revolution, Retail Revolution"

The end of consumption is initiated by three revolutions: a data revolution, a consumption revolution and a retail revolution. Consumption is no longer tied to a particular locality, but can take place anywhere. Data is becoming more and more important. The correct handling of this new wealth of data is fundamental. The distinction between online and offline is becoming increasingly difficult. Instead of either-or there is the "Entanglement". The data revolution is driven by changes and new ways of thinking. Consumers no longer see themselves as owners, but as users. Distances are no longer measured in meters, but in minutes. Consumption will one day be synthetic, determined via a direct interface between humans and computers in the brain. Sensory perceptions and experiences can thus be reproduced, modified and expanded. This will fundamentally change consumption and trade. Social media and social pleasure will be much more immediate in the future, because feelings can also be shared.