Debenhams chairman Sir Ian Cheshire said retailers need to do more than just sell “stuff” if they want to be winners in the cut-throat age of the internet.
Cheshire told delegates at The World Retail Congress in Dubai that retailers need to offer shoppers great experiences.
The former Kingfisher boss said that ecommerce and social media has created “hyper-transparency”, which has made it hard for bricks-and-mortar retailers to compete on price with online rivals.
He said: “It’s not enough simply to have the stuff. You’ve got to wrap it in a set of experiences.
“As a department store, Debenhams sells a lot of beauty products but increasingly that is through a makeover, an experience customers can share with friends and combine with a coffee shop visit.”
Cheshire said this meant retailers need to invest more in staff training in order to provide “real service”.
He added that ecommerce, particularly the growth in mobile sales, had been the biggest “game-changer” in retail over the past five years.
The winner takes it all
The Debenhams chairman said the internet was also driving a “winner takes all phenomenon” as businesses such as Amazon are able to scale up rapidly around the world in a way that was not possible 10 years ago.
“It means that unless you are doing something better than Amazon or the local equivalent, something interesting and special, you are going to struggle.
“It’s also true in shopping centres – the gap between the winners and losers is becoming more extreme.
“That’s not just because of the erosion of the bricks-and-mortar channel, it is also because customers have got lots of stuff and are only looking for one or two places they want to go.
“It is an opportunity for great retailers offering unique products and great experiences to build truly great global brands but it means that the bar has been raised.
“Just showing up with stuff and hoping someone is going buy it doesn’t cut it anymore.”
An American perspective
At the same conference, Macy’s chairman Terry Lundgren claimed that many retailers have been too slow to react to rapidly changing shopping habits.
He argued that in 2015, retailers had “blinked” and misread customer behaviour.
“Many thought when oil prices declined our customers would have more to spend.
“They did, but instead of buying clothes and handbags they bought cars, new property or invested in their homes or on services such as Netflix,” he said.
Lundgren told delegates that retailers must respond by creating exclusive products, more exciting stores and a “seamless” online and in-store experience for shoppers.