The future of the retail, disruptive technology and e-commerce, and retail strategies for growth, were the hot topics on the second day of the The Consumer Goods Forum’s Global Summit yesterday (19 June 2014).
Innovation and disruption
Professor Tedlow, professor emeritus at the Harvard Business School, kicked off day two with a look at the ‘age of disruption’ and asked what type of companies will continue to exist in the future. In this talk, Professor Tedlow discussed whether the physical store will soon be redundant, with online shopping growing at 15% per year and services such as Amazon Prime and Google Shopping Express coming into the market. He believes that in the age of disruption, only those who make ‘big bets’ on their future will succeed.
To provide a real-life example of the new disruptive retail space, Doug Herrington, vice president consumables at Amazon, then looked at how businesses should innovate on behalf of their customers. He outlined how the evolution in online is similar to the changes in offline many years ago – new formats for shopping are emerging and consumers now have multiple shopping patterns – which drives the need for continued innovation. Herrington closed his session by urging the industry to focus on end customers as opposed to retail customers, and plan for not what can be accomplished in the next year, but what can be accomplished in the next decade.
Entrepreneur and founder of Rocket Internet, Oliver Samwer, gave a passionate talk about the future of retail. Smartphones have turned every person into a potential online consumer, and it is now software, logistics and payment systems that are the critical enablers of e-commerce Samwer said. He proposed that the consumer of the future will not want to use a physical store, and that younger generations will be solely focused on mobile – shopping neither in-store or on websites. Additionally, developing markets will provide significant opportunities and challenges for retailers, with Samwer stating that emerging markets will not follow the same evolution as mature markets, but will instead ‘leapfrog’ physical retail and move straight to digital.
The in-store experience
With a different perspective, Mark Price of Waitrose and the John Lewis Partnership, showed how the in-store experience can provide great value to consumers. Paramount to this is a strategy of ‘new’ and ‘free’ which Price says are the two most important words in retail. He concluded that the market is polarising into companies who either provide experience and differentiation or value and low prices – an idea also mentioned by Professor Tedlow – and the winners will be retailers who can clearly define and articulate which one they are.
This was followed by an animated discussion on new models for connecting with consumers, with Oliver Samwer of Rocket Internet; Doug Herrington of Amazon; Mark Price of Waitrose and the John Lewis Partnership; and Erin Hunter, global head of CPG strategy at Facebook. These industry leaders debated the relevance of online and physical stores and how to meet the needs of the consumer of the future.
Independence and international growth
Highlights from the afternoon session included the presentation from Serge Papin, chief executive officer of Système U in France, on what makes independent retailers successful and the session from Michael Duke, chairman of the executive committee of the board of directors at Walmart on insights from a long career in retail.
Papin discussed the benefits of being an independent retailer, including their ability to be adaptable and enable workers to pave their own future and become the head of their own business – attracting young workers who are interested in the freedom an independent business provides.
To conclude the day, Duke of Walmart offered advice on successfully expanding a retail business, and emphasised the importance of ‘local’ to retail. He explained that businesses need to appreciate the importance of the local market when expanding internationally, and adapt their merchandising strategy to suit. Duke also spoke about the importance of the store in the new retail environment, saying that digital, e-commerce and retail need to be intertwined, with technology integrated in-store.
Peter Freedman, managing director of The Consumer Goods Forum, said: “The agenda took a deeper look at how developments in digital and online are having a big impact on our industry, as new technologies and new entrants to the market disrupt traditional retail and shopping patterns. We know that consumers expect to be provided with an experience that is fast, convenient, and as advanced and innovative as possible. Although it’s not easy, businesses need to look at how they can meet, and exceed, these expectations, whether online or in-store. I’m excited by the enthusiasm that the presentations and panel discussion have inspired.”