BERLIN — A more than 3-D scenario emerged at the 2010 World Retail Congress here, where “double-dip recession,” the “digital revolution” and “multichannel diversity” were the meeting’s main buzzwords, joined by “differentiation,” “data usage,” “store design” and even the “power of dreams.”
The three-day event, which attracted more than 1,000 delegates from 57 countries and more than 130 speakers, ran Oct. 25 to 27.
As for a double dip in the U.S., Deloitte’s director of global research, Ira Kalish, and numerous other speakers said it’s not in the cards. Kalish, who got the conference off to a rapid-fire start with a global economic roundup in a mere 10 minutes, argued that the conditions for double dip do not exist. However, he expects economic growth Stateside to be slow, and come less from consumer spending and more from exports. He also projects consumers will spend less on discretionary and big-ticket items and more on what they really need — and that in a price-driven way.
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“The good news is that U.S. corporate profits are up,” Kalish said. “Companies are now sitting on a huge load of cash, which bodes well for acquisitions and convergence — also in retail.”
But, he added, retail capacity has grown far more than demand in the last few years, leaving the field open for a shakeout and consolidation through mergers and acquisitions and bankruptcies.
While recovery is under way in most of the world, the conditions vary widely. The consensus among attendees at the conference is that the postcrisis world has fundamentally changed. “The attitude to debt and spending has gone through a change — though not in China, where it’s roaring ahead in double digits,” noted Ian Cheshire, group chief executive officer of Kingfisher. “But there’s been a shift in Western Europe and the U.S., which is why I see a three-speed world developing.”
Cheshire’s three tiers put the BRIC countries leading growth in position one, the U.S. and Germany in division two, followed by the rest of Western Europe.
Change has become a constant both globally and locally, and nowhere more so than in the digital world, where the rapid pace of technological advances makes crystal-ball gazing a fairly hazardous exercise. As was often noted over the three days, who could have foreseen just a few years ago the influential role social networking would now be playing in retail? Yet one future trend that popped out with clarity was the rise of the mobile phone as online navigator and pivotal shopping tool. “E-commerce is moving to m-commerce. It’s the fourth commercial channel,” stated Paul Alexander, ceo of Beyond Analysis.
Google Inc.’s vice president for northern and central Europe, Philipp Schindler, said more than half of today’s search-centric consumers are searching the Web on mobile phones rather than computers. “The mobile phone has become your little companion, your shopping guide. Over 30 percent of American adults have used the phone in-store to get information on price, et cetera,” he said.
Collective Brands Inc. ceo and president Matt Rubel explained how he’s seen young women at Payless taking pictures of themselves and sending them to their friends to ask whether they should buy the shoes. A mobile phone, he commented, “is somebody’s personal device. It’s a reflection of them, and if you can get into their virtual handbag and communicate with them, you’re in. But if you become annoying, like their mother, they’ll turn you off.”
Multichannel retailing is a reality no one questioned and indeed is widely regarded as a boon. “Multichanneling is the best way to actually grab the attention, grab the time of our consumers. And we think this is absolutely essential, because this is the underpinning dynamic, the underpinning opportunity in fashion,” remarked Pascal Bollon, global director, fashion, for GfK.
Fears of cannibalization were mostly allayed, and there was much talk of multichannel integration. One new focus was Web-to-store. “There’s the realization that an important amount is being researched online and bought in-store,” said Tony Stockil, ceo of Javelin Group. Primarily speaking about the U.K. market, he predicted Web-to-store sales would grow from 25 to 35 percent by 2020. Why the Web-to-store move? “Convenience. Customers like to check stock availability online and then click and collect in-store,” he explained.
“Differentiation” was another main catchword during the conference, and is considered retailers’ most crucial weapon — both online and in-store — in defending and growing market share. But it also spilled over to global reach, with much talk about the potential and pitfalls of the emerging markets. The BRIC countries still capture the most enthusiasm, the sheer population of China and India being an irresistible lure, as is the growing middle class of Brazil.
Russia, however, seems to have lost some luster, hard hit by the recession, from which it is recovering, but still rife with corruption, which has scared many off, speakers said.
According to a report by Deloitte and Planet Retail, there are other promising emerging markets waiting in the wings. Called the “hidden heroes,” they include Colombia, Egypt, Indonesia, Mexico, South Africa, Turkey and Vietnam.
But regardless of the country, retailers were told to think local while going global, cherishing local management and respecting local preferences. Humility, it was stressed, is the name of the game.
The global-local divide was also bridged in the subject of “glocals,” from status-starved, brand-loving, ambitious Chinese workers who need a nudge to spend rather than save, to Australian teens importing their own trendy goods more cheaply via the Internet than they can be bought in stores, to shoppers with smartphones in India. The accent was on not only utilizing the power of global brands that tap into strong consumer values and truths, but on adapting them to local tastes, trends and needs by knowing and respecting the local market.
“As long as you stand for something that is an experience the consumers can connect to globally, that name, that brand can travel. But the offering absolutely has to be relevant.…It’s really about the amount of localization that a business model is able to take,” stated Julia Goldin, Revlon Inc.’s global chief marketing officer.
The data explosion was another key issue. “Most retailers have a large amount of [customer] data, but the question is how to use it,” said Bernie Brookes, ceo of Myer, Australia’s largest department store. Some possibilities from the Myer model: use it to reward and retain customers; look at lapsed customers and send them a tailored offer to reignite their interest, and customize mailers for different customers and needs. Myer now has 17 different mailer versions to target customers in terms of what they do and don’t buy. The store used to send out 3 million large catalogues but now sends just 80,000 to that specific customer group.
Lastly, dreams were the theme of Burberry ceo Angela Ahrendts’ keynote presentation. She noted she’s often been asked to talk about the hard facts and figures of her company’s success, but here was choosing to discuss a set of internal bywords never previously articulated outside Burberry — soft strategies that have been vital in navigating the global financial crisis.
Listing style, structure and values as guiding points, Ahrendts explained, “The soft strategies are the glue that connects this young-old company. They bring emotional, visual and intuitive depth to our tool kit. The intangible that ignites the tangible. And we don’t pursue them solely for commercial effect. They define the type of environment in which we want to operate. The type of company we want to be. The things that we truly believe in.”