Emma Herrod brings together some of the retail insight from this year’s InternetRetailing Conference which took place in London in October.
2018 is a challenging year. This was the overriding feeling at the InternetRetailing Conference which took place in London in October. There is hope though amongst the retailers who gathered at the Business Design Centre, many of whom had attended the conference every year since the event’s inception in 2006.
The day started with a look across the skills necessary for innovation, a discussion on the key topics from AI to AR and the value of data to international expansion in round table events and ended with a panel of experts sharing ‘one’ word that would take retail forward into 2019.
However, news as the conference broke was that fashion retailer Coast had collapsed due to “difficult trading conditions” according to a statement by the retailer’s directors.
Karen Millen has bought the Coast brand and website and will continue to run the remaining concessions.
Many retailers at the Conference agreed that 2018 has been challenging, while commenting that the uncertainty of Brexit and the fluctuating position of sterling is not helping UK businesses.
The securing of Coast’s ecommerce business and the continuing growth of online across retail is testament to the importance of digital channels. Change is needed though with attendees at the InternetRetailing Conference saying that they are working on a mixture of optimisation to reduce points of friction in the customer journey and innovating and testing to change the omnichannel experience.
Sean McKee, Director of eCommerce and Customer Experience, Schuh commented in a panel discussion that the shoe retailer prioritises getting the customer journey right. “It’s about identifying pinch points or low hanging fruit,” he said, continuing, “our business is around location of stock, selling at the best price and selling across channels.”
At Lidl, the removal of friction is about thinking about customer pain points and how digital innovation can address those. “It’s not just about the consumers,” said Alex Murray, Digital Director, Lidl UK, explaining that delegates need to look inwards into their business and work out how innovation can help them renew their way of thinking.
However, as McKee pointed out, every retailer has to work out what the levers are for their own business. “There isn’t a formula,” he said.
The same is true when it comes to innovation. The panel agreed though that there is sometimes very little advantage to being the first mover. Technology may make something possible but if the customer isn’t ready it’s not going to be adopted. Murray gave the example of lockers into which customer orders can be delivered saying that when he looked into the proposition 15 years ago while working at Waitrose there was “very little appetite from consumers.”
However, the panel agreed that some models do completely disrupt a market and whatever happens to the disruptor, such as Uber, things will never go back to how they were before. “Uber is the ultimate friction-free product experience,” said McKee.
Some consumers will use new innovations differently. While discussing the rise of voice search and devices including Alexa, Murray said that “we’ll find there’s a generation that will respond to it and use it in a way that’s different to how we will.”
The panel believes that the younger generation will use voice more but there is still work to be done to make the technology more convincing and to add emotion. And when it comes to measuring its effectiveness, McKee pointed out that there are clear points of comparison between voice and text. “We know how consumers search with text,” he added.
When it comes to innovation, China’s Alibaba is pushing the boundaries not just of online commerce but across the full ecosystem. Its mission is “to make it easy to do business anywhere,” David Lloyd, Managing Director, UK & Nordics, Alibaba Group, told delegates.
China accounts for more than 40% of the world’s ecommerce market with 800 million internet users in the country.
Three quarters of a trillion dollars are transacted on the Alibaba platform alone each year. Single’s Day has grown into a $25bn phenomena. What started as an event involving 27 brands taking $7m in transactions on the day in 2009 grew to 140,000 brands taking part in 2017.
Alibaba also runs Youku, the YouTube of China, food delivery services which will deliver a coffee to your desk, logistics services, a service similar to Google’s AdWords called Alimama, and its payments facility Alipay which allows shoppers to pay for items online or offline from taxis to market stalls. Alipay has more than 600 million users.
Lloyd explained that Alibaba’s big focus in Europe is helping retailers from this region enter China. This has meant that Alibaba has had to move from just being an ecommerce business. With every user visiting its Tmall and Taobao platforms 7 times a day for around 28 minutes, helping European companies “is not just about ecommerce, it’s building a brand,” he said.
A lot of the company’s investment recently has been in offline services linking bricks and mortar retailing with digital. Its Hema supermarkets, for example, are as easy to shop online via an app as they are offline. The 50 stores have also been designed to be destinations in their own right with customers able to choose a live lobster and have a chef prepare and cook it for them while they wait and eat it there.
The omnichannel technology used at the Hema stores is being incorporated into the RT-Mart hypermarkets operated by the Sun Art Retail Group, of which Alibaba owns a 36% share.
Each item in a store has a QR code so shoppers can just scan the items they want and have everything delivered to their home within one hour without carrying anything in store. If an item is out of stock it can be ordered for delivery at another time. These stores incorporate a Tmall zone so shoppers can scan something with the RT-Mart app, add it to their order and have it delivered along with the rest of their shopping.
There are 600 million people in China who are not yet online. Alibaba is not ignoring them though. The company has developed a retailing solution for the country’s 600,000 local convenience stores to help them analyse what’s happening in their local area, what’s selling quickly, which products are selling but they do not stock etc. This gives them not just the picture of their own store but what is happening in the wider area as well as being a way for them to utilise central purchasing and the ability to receive all of their orders in one delivery.
“Stores are absolutely an integral part of our future,” said Lloyd.
And what of the future for ecommerce and retailing in the UK? A panel closed the InternetRetailing Conference with a discussion on what ecommerce will be like in 2021. With everything happening at pace in the industry, the panel were asked for one word that would see the industry through 2019.
For Sean McKee, the one word was “Future”. Retail is “going through a tough transition at the moment but we have the wit to get through it,” he said.
Alastair Stirling, Industry Head – Retail, Google, said “Persevere”. “It’s a difficult environment and technology isn’t easy and it’s evolving. Those who are successful are the ones that persevere,” he said.
Joris Beckers, Founder, online grocer Picnic, dared retailers “to execute the one big idea. The biggest idea you have, just do it”.
Rounding up the event, Internet Retailing’s Editor-in-Chief Ian Jindal deliberately misquoted Churchill with “leadership is the ability to go from failure to failure without any loss of vigour.”
A note in point in these current uncertain times which sees one retailer leaving the arena as another reports 28% growth in profit.