Retail is playing catch-up to changes wrought by digital mobile technology and big data. It’s time to harness the potential of new technology.
Retail is playing catch-up to changes wrought by digital mobile technology and big data. While it sees the changes playing out in other industries, two main factors make it harder for retailers to adapt.
First, our legacy of a business model based on physical space and stock is slow to change, especially in the UK with our lease structures.
We don’t really run customer-centric businesses – we run machines for selling products and until Clubcard that’s all we could measure. We are not following customers as much as supply chains.
Second, the leadership – myself included – is not yet fully digital.
But the shift has happened in other industries, especially travel, as they found how to harness the technology and it must arrive in retail. While the impact of these trends is challenging there are also opportunities. There are five areas I see opening up.
Store service enablement
The first is store service enablement. Shops are not redundant even if we will need less space.
Putting mobile tools in the hands of colleagues to deliver better customer service is the biggest upside for traditional retailers. Apple has led the way but others are developing solutions.
Then there is social shopping. We have the opportunity to speak to groups of customers in the middle of their shopping process and allow them to share opinions and suggestions in ways impossible before.
It potentially allows new models of collaborative consumption, group buying and co-creation of product.
Third, global markets. The scale of the addressable market has become truly global as smartphones allow us to reach the whole world.
The reason Uber can be valued at over $15bn (£9.8bn) is that it can reach massive scale quickly. Good retailers will be able to create bigger business more globally than before.
Next, digital personalisation. Data should allow us to predict, promote and retain customers differently.
Card-based loyalty schemes will wither to be replaced by richer multi-dataset systems. The more relevant and easy we make it for customers to shop with us the more they will.
The cross-sell and upsell potential has not been exploited.
Running supply chains better
Finally, there should be productivity gains in running supply chains better with less stock in the system, through better prediction and response capabilities.
We should be able to harness different supply chains more effectively, including marketplace models. Amazon has led the trend and has a very different model of how you can create value from the process of a customer buying a product from a supplier.
A test lab for the world
“I expect to see innovation here ripple around the world”
The UK is the potential test lab for the world as the most penetrated ecommerce market, with savvy digital consumers. I expect to see innovation here ripple around the world, with the one watch-out being China where the world’s largest social media market could bring whole new models.
The opportunities and threat of disruption have never been higher but, for the winners, a whole new world is emerging.
- Sir Ian Cheshire, former chief executive of Kingfisher. Taken from the British Retail Consortium’s Annual Retail Lecture.