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Ahead only

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Retailing in 2018 has become a race for the leaders to stay ahead in strategic terms with the offers they can present to their customers. For everyone else, the challenge is to implement at least enough best practice to keep up and ensure satisfaction.


At a strategic level, the challenge for European retailers is to deliver a joined-up, consistent and innovative offer at scale and across many countries. Any established or emerging service that works for multichannel retail is worth tracking across the span of all the core retail disciplines – logistics, customer service, localisation, you name it – and our research reflects this.


What the Top500 do


Top500 IREU retailers are moving fast to roll out certain services, collectively creating new service benchmarks and industry norms in the process. One striking development in the past year has been customers being able to return items purchased online to a physical store. In the Czech Republic, development has been particularly dramatic, with a near-doubling of the availability of the offer among Czech retailers (36% were offering it a year ago, versus 69% now). It’s also grown among the Top500 in the majority of countries, with at least a 50% increase in relative availability registered in a further six countries, and substantial increases right across the Top500.


Turning to other metrics, in France, click and collect was being offered in 49% of Top500 retailers a year ago but the proportion has now reached 68%. That’s a similar level to the UK and is overtaking the previous leaders in Belgium, Norway and the Netherlands. The adoption of click and collect was also sharply up (52% increase year-on-year) in Finland. Not surprisingly, those regions where adoption was already high saw slower rates of growth.
The adoption of dedicated retailer apps is also on the rise, with a whopping 68% of the Top500 now offering iOS apps and even more, 70%, offering Android. App adoption varies by sector substantially, with 90% of grocery retailers using iOS (97% on Android), against lower adoption in other niches. Mobile app features such as augmented reality (AR) have also jumped in popularity, from a low base in some niches, such as homewares. Here, 13% of those with an app are offering AR – a more than fourfold increase from 3% a year ago. We’ve also noticed the widespread use of barcode scanners on food-and-drink and media retailer apps.


How the leaders measure up


Our Elite retailers, operationally excellent with a broad reach, also lead the way with Strategy & Innovation. IKEA, for example, excels in the way it has made a virtue of delivering a customer experience with distinctive ‘friction’ rather than striving to make its retail operations as frictionless as possible. Where some organisations are now mapping out their customer journeys to identify bottlenecks, then make the path to purchase and beyond as easy as possible, for IKEA the idea is that friction can play a part in producing memorable and rewarding experiences which, in turn, increases customer loyalty.


What kind of friction are we talking about? Well, visiting an IKEA takes time, requires you to take note of where to find items further on in the store and, unless you know the ‘secret’ shortcuts, more or less forces you to walk through the whole store each and every time. It isn’t only about pain, either, but that idea of engagement. When IKEA shows off a kitchen or even a 350 sq ft home in all its detail and space-saving glory, it gets customers thinking.


Elite retailer Zara is at the forefront of innovation, using pop-ups and prototypes to test its plans. It recently launched an augmented reality add-on to its app that allows shoppers to see the clothes they are viewing ‘come to life’. The Zara AR app allows shoppers in store and online to hold the app over certain signs and see models in those clothes appear and move about on the screen in front of them. They can (and do) even talk about the clothes. Plus, naturally, all of the outfits can be purchased by a single tap of the app.

 

Elite retailer zara is at the forefront of innovation, using
pop-ups to test its plans


How the markets vary


When you stop to compare innovations and services in country markets, some contrasts really stand out. In the UK, next-day delivery across all retail markets is up by a quarter in 12 months and 45% now offer it. No other market has rolled out next-day deliveries to anything like the same extent. Luxembourg is next on the list at 17%, with the Netherlands and France close behind.
A related service, nominated-day delivery, is less well established. Again, the UK leads the way with 17%, up by more than two-fifths in 12 months. It’s also more than double the next best in terms of coverage – Lithuania at 8% service coverage.


On the tech side, apps are being very widely used now across nearly all country markets, but there are differences under the bonnet. In the Republic of Ireland, for example, more than half of apps have a barcode scanner included, while that’s only true of a third of apps offered by Hungarian retailers and, going down the rankings a little, 21% of the apps offered by Romanian retailers.

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