BT has unveiled a vision for British retailing in 2020 by bringing together a panel of retail executives and researchers to forecast future trends. Retail Times editor, Fiona Briggs, joined a roundtable discussion to debate the key themes
Personalised shopping experiences, complementary online and offline offers, wireless and enabled store environments and no queuing.
Those are some of the future predictions for UK retail outlined in a new report commissioned by BT.
The communications provider brought together a panel of retail experts to define Retailtopia – a vision for British retailing in 2020.
The panel identified 10 key themes (see below) likely to shape the future of retail in the next eight years.
Patrick Barwise, chairman of Which? and panel chair, urged retailers not to be short-termist despite the challenging trading environment.
“There is a danger that a focus on short-term profitability and reduced investment in innovation could damage our long-term ability to create the best shopping experience in the world,” he said.
Barwise highlighted the UK’s global leadership in online shopping with almost £30bn in online retail sales in 2011 (BRC). However, he questioned whether the UK would retain its pole position in 2020.
Mike Watkins, head of retailer and business insight at Nielsen, said retailers will become more reliant on being able to communicate in the most effective way and offer the consumer what they desire.
According to Watkins, there will be a convergence of online and offline but the differences between the two channels will become more relevant.
“Online is more influenced by word of mouth. Twenty to fifty per cent of all decisions to purchase are influenced by social media,” he said.
Online, consumers also have a wider repertoire of purchasing so innovation will be increasingly important in future, said Watkins.
Peter Madden, chief executive at Forum for the Future, said information and knowledge will be embedded in every aspect of retail in future and new technologies will be used to create more sustainable businesses – cutting energy, waste and water, for example.
There will be a trend to de-materialise such as the shift from vinyl records to MP3 players, said Madden.
Retailers will need to help consumers make wiser choices, he argued.
“There will be total transparency around products and they will be packaged in ways that make sense for customers.”
The Holy Grail will be making more money while reducing the environmental impact, he said.
Ralph Hengstenberg, marketing director, UK, BT Global Services, tackled so-called plumbing issues – the integration of online and offline technologies and claimed few retailers had got it right.
“The in-store analysis of consumers and the online one are not integrated,” he said.
There is also a shift in CRM (Customer Relationship Management) from a retailer holding data and information about the customer to data for the customer and being “selectively intrusive”, he said.
Shopping in future will require better connectivity, said Hengstenberg.
JJ Van Oosten, former worldwide CIO at Tesco.com, said retailers will need to transform their economic models and skills base in future.
He contrasted the smaller range of a non-food retailer such as B&Q with 35,000 skus and Amazon’s offer of 5m skus.
“The economics of carrying a big range is different in terms of working capital, distribution and fulfillment,” he said.
“Very few of the big four retailers are making money on their online operations,” he claimed.
The costs of distribution are twice as high as those of Amazon and it requires a big investment in automation in order to manage a larger range.
Van Oosten suggested marketplaces may emerge to consolidate different product offers and retailers would leverage their stores for online sales.
New skills will be required to manage the volumes of a long-tail versus edited range.
“It’s a very different way of working,” he said. Speed will also be of the essence. “In a multi-channel world, people expect things to happen immediately.
“Retailers will need things and new apps and there will be visibility of inventory on mobiles therefore they will have to work faster and better than today.”
Emer Timmons, president BT Global Services, said consumers had four key retail requirements: personalisation, interaction, a seamless experience and no queues.
Consumers also want to buy in a secure environment, she said.
Retailers, meanwhile, are seeking supply chain efficiencies and promotional effectiveness. They need real time analytics to monitor stock, pricing and campaigns and it will be cloud-based for agility.
Timmons referenced BT’s £2.5bn investment in super fast broadband and reported Sainsbury’s, which is growing its online business at pace, has taken the service in 333 stores and enjoying increased efficiency.
Staff are now deployed to offer customers a better shopping experience, she said.
10 key themes for Retailtopia:
1. Despite the growth of online shopping, physical stores will still have a vital role, increasingly focused on complementing digital channels
2. Retail experiences will become more customised, personal and interactive
3. Retailers will offer customers a seamless branded multi-channel experience
4. Geographical boundaries will continue to decline, so UK customers will look more actively to shop online beyond the UK – and vice versa
5. The most successful retailers will have slashed customer waiting times both in-store and for online delivery
6. Wireless enabled in-store environments will help retailers connect in helpful ways with customers while shopping, releasing staff from tills and empowering customers to actively use personal mobile devices
7. Payment providers will give customers increasing confidence that they won’t fall victim to cyber-crime
8. Retailers will use on-demand cloud-based services to reduce operating costs, enable staff to be more effective and delight customers
9. Fulfilment of online retail purchases will be more cost-effective and efficient thanks to automation and greater co-operation between retailers and supply chain partners
10. Social media will increasingly complement advertising as a tool in shaping consumer brand perceptions