The industry’s biggest names from across the globe met at the fifth World Retail Congress to tackle the big issues of the day. George MacDonald and Rebecca Thomson report from Berlin.

This year’s World Retail Congress touched on every­thing from the growing power of consumers to the difficult economic conditions in Europe. Not only must retailers continue to evolve in a multichannel world, they must do so in a time of constrained spending, the only glimmer of hope being healthy emerging market economies. Here we pick out the main themes of the conference and discuss how they could affect retailers in the UK.

Multichannel

Multichannel was a big theme for retailers at the congress, whose preoccupation with a new era of retailing led to wide-ranging discussion on aspects including mobile commerce, data analytics and personalised marketing.

While many are now well on their way to becoming truly cross-channel businesses, retailers still have plenty of challenges to overcome and each needs to choose the path that will work best.

One thing was certain, however: multichannel is the best route to success. As Debenhams ecommerce director Simon Forster observed of his business: “The customer buying online is rapidly moving towards the customer buying in-store. The trend is moving towards the demographic that shops on the high street.”

For many, the immediate answer could be mobile. It provides retailers with an easy link between the store and online worlds, and it’s something that consumers are taking to like ducks to water.

Matt Brittin (Google UK and Sainsbury’s)

Matt Brittin (Google UK and Sainsbury’s)

Matt Brittin, managing director of Google UK and a non-executive director of Sainsbury’s, said the move was non-negotiable, with nearly 20% of online searches now being done on mobile. “Not having some kind of mobile presence is like not opening your shop on a Tuesday. Mobile is growing at a massive rate, the like of which we haven’t seen since the early days of the internet.”

It’s the many different strands of multichannel retailing that can make it confusing. Not only must ecommerce and store retailing become more integrated, but mobile commerce and social networks must be included too.

The only way to cope is to have impressive command over your data. The importance of good data management was continually flagged up during the congress. As Amazon vice-president of international seller services Eric Broussard said: “It will be very difficult for businesses to compete across multichannel if you don’t have that integrated data.”

Effective infrastructure is the only way to make sure a multichannel offer is good enough, and once the basics are in place the possibilities are endless. Facebook’s head of commerce partnerships, Gavin Sathianathan, suggested bulking up CRM systems with in-depth information on what an individual consumer likes, by combining retail data with Facebook’s trove of social information.

“Retailers have a lot of data on customers, and at Facebook we have information on how users interact with the world on a day-to-day basis. The challenge is how we meld the two together.”

Economic outlook

The global economic outlook is mixed, experts thought. There are stormy times ahead for many developed countries but cautious optimism about growth in emerging markets.

Michael Gatti (US National Retail Federation)

Michael Gatti (US National Retail Federation)

Michael Gatti, senior vice-president of industry affairs at the US National Retail Federation, said a lack of consumer confidence in North America was set to linger for a while yet. “Our unemployment rate is high and it’s really affecting consumer confidence. It could be a very long time before we get back to pre-recession levels of consumer spending.”

India was flagged up as offering hope for retailers wanting to expand in the next decade, as Europe and the US continue to struggle with debt and the fall-out from financial crises.

Dr Ira Kalish, director of consumer business at Deloitte Research, thought the situation in Europe was “deeply troubling”. “I don’t really see a growth scenario in the short term,” he said.

“I foresee recession – the question is how deep.” Depending on decisions made in the next few weeks the situation could also impact the US economy, he added.

As developed economies face difficult times, India may prove to be the best bet for retail growth in the coming years. Not only is its economy in fairly good shape, but its famously restrictive policy on foreign investment could soon be loosened. And as wages continue to rise in China, the subcontinent looks set to become the new manufacturing hotspot.

“I’m cautiously optimistic about India,” said Kalish. “It has tightened monetary policy and it has good demographics, so it’s possible [it] could grow more than China in the next decade.”

Dr Ira Kalish (Deloitte Research)

Dr Ira Kalish (Deloitte Research)

China is often the poster child of emerging market success, but Kalish is worried about potential turbulence ahead. The country’s structural issues are causing some concern despite the potential of its fast-growing middle class. State-led investment in infrastructure has left the country with homes nobody can afford, malls few people shop in and trains few travel on. “State-led infrastructure investment represents about 50% of GDP compared with 30% for most emerging markets,” he added. “The investment is just to keep people employed.”

Emerging markets

For years the BRIC markets – Brazil, Russia, India and China – were retailers’ big international expansion focus.

Despite concerns expressed about the sustainability over aspects of how some are developing, particularly China (see above section on the economy), there is no doubt that huge potential still exists. However, attention is increasingly turning to other parts of the world, too, especially Africa, a continent once written off pretty much in its entirety as a basket case.

What has changed attitudes is Walmart’s decision to enter Africa – a move that highlighted the extent to which the continent is home to some of the most attractive emerging markets in the world.

Walmart’s acquisition of South African business Massmart is likely to prompt others to assess potential.

African states accounted for five out of 10 countries spotlighted in Hidden Heroes: the next generation of retail markets, a report published by Planet Retailand Deloitte.

Algeria, Kenya, Morocco, Nigeria and South Africa were the African countries identified, along with Kazakhstan, Pakistan, Peru, Serbia and Vietnam.

Kalish said significant growth – which had long eluded Africa – the fact that there are “lots of mouths to feed” and an emerging middle class were among the factors that made Africa of increasing retail importance despite political instability, poverty and conflict.

A fragmented and underdeveloped retail market can create real opportunities, Kalish added. “There are issues and problems so approach carefully, but they are certainly worth taking a look at.”

John Fraser, divisional director of Woolworths International, which operates in South Africa and other African nations, said the biggest challenge was finding the right real estate. In countries such as Nigeria, property costs are high and infrastructure can be rudimentary.

John Fraser (Woolworths International)

John Fraser (Woolworths International)

Fraser also believes that it is in retailers’ interests to provide consumers with credit in order to build spending power. “Africa is almost the final frontier in retailing,” he concluded. “Walmart’s entry is recognising that Africa is a really good retail investment. They have acquired a footprint in 13 or 14 countries – it’s really a blank cheque.”

Insight

As retailers internationally confront continued tough trading conditions, some of the industry’s most successful retailers shared their expertise and opinion about market directions and the ingredients of success today.

Bob Thacker (former chief marketing officer at Office Max)

Bob Thacker (former chief marketing officer at Office Max)

Bob Thacker, former chief marketing officer at Office Max, said retailers without big budgets must deliver “big ideas” to increase sales. In challenging markets it was “making news, not making ads” that would deliver a return on marketing spend.

He outlined the thinking behind a series of seminal campaigns run during his tenure at Office Max, including the viral holiday season sensation ‘Go elf yourself’, which the company launched five years ago.

Thacker reflected: “We had a million dollars to spend and our advertising agency advised us to put it all in to viral marketing. Remember this was five years ago. It became such a massive hit that the sale of Elf-related merchandise now actually makes it a profitable operation in its own right.”

At a time when budgets are often not available for outside agencies, Thacker added that retailers needed to look inside their businesses for ideas and warned: “Fear kills creativity, so you must create a fearless environment.”

Neiman Marcus chairman Burt Tansky explained how the recession had taught retailers valuable lessons, even in the relatively insulated world of luxury. “We didn’t see the recession coming when we were buying and we had far too much stock, so we made some quick decisions but we have emerged a leaner and cleaner business,” he reflected.

But he added: “While we have continued to invest in very high levels of customer service, I am sorry to say that I feel many retailers have allowed this to slip.”

Tommy Hilfiger, the founder and principal designer of the eponymous brand and retailer, offered his views on the impact of celebrity culture on apparel retail.

Tommy Hilfiger

Tommy Hilfiger

Hilfiger, who has had and maintains business relationships with many celebrities, said “authenticity” was key as stars increasingly launched their own brands.

“The new way to do celebrity branding is to make sure the celebrity is talented. If you just put a celebrity name on as brand it doesn’t work.” The “authenticity” of celebrities’ involvement in their brands “is the difference between it being successful or not”, he added.

Likely retail stars of the future and the greatest retailers of the moment were celebrated in equal measure at the World Retail Congress.

Students from Hong Kong Polytechnic University emerged victorious in the Retail Futures Challenge to come up with a brand or retailer entry strategy to the long-established Berlin department store KaDeWe.

The Hong Kong team, which was supported in its effort by global fashion giant Li & Fung, planned the launch of Chinese brand Blanc de Chine.

The team from Hong Kong Polytechnic University who were winners of the Retail Futures Challenge

The team from Hong Kong Polytechnic University who were winners of the Retail Futures Challenge

They showed how the brand’s blend of Chinese tradition and modern fashion would complement KaDeWe and developed innovative digital ideas including a ‘zen mirror’, which reflects passers-by as if they were wearing Blanc de Chine clothes.

The team beat competition from New York’s Fashion Institute of Technology, London’s Fashion Retail Academy, Mumbai’s Welingkar Institute of Management, Milan’s IULM and Tokyo’s Rikkyo University.

The achievements of established retailers, both stores and pure-plays, were marked at the Oracle World Retail Awards held in Berlin’s Deutsches Historisches Museum.

Marks & Spencer, Australian department store business Myer, Chinese etailer 360buy.com, Tesco, Brazil’s Pão de Açcar, Walgreens, New York’s Eataly, Adidas and fast fashion giant Inditex all won awards.

The two top awards, outstanding leadership and retailer of the year, were won by Ralph Lauren president Roger N Farah and luxury group Burberry.