Retail Technology Show review – challenges presenting opportunities
Retail executives and technology leaders converged on ExCel London for the Retail Technology Show that proved to be a melting pot of new solutions and thought leadership across the busy Expo floor and multiple conference stages.
By Glynn Davis
Archie Norman, chairman of Marks & Spencer, set a positive tone for the event when he put the current tough challenges in context during his appearance in front of a packed room: “We’ve said it’s been a challenging period at every point in the last 30 years. There are always headwinds, it’s the nature of business and you’ve got to be on the front foot.”
Arresting the drift
Never Miss a Retail Update!At M&S this has involved arresting the long-term drift it was suffering, which he puts down to “organisational leadership failure”, and bringing about major change that involved “fracturing” the business. This has led to changing as many as 80% of the top 200 people in the company. Norman says Covid-19 also presented an opportunity to boost online revenues that had represented 17% of group sales and now accounts for 32%. “We were not going to go back to what we were,” he says.
He is less enamoured of selling food online than non-food and is involved because “you are compelled to do it…but it’s desert of profit”. He adds: “More wealth has been destroyed here than any other industry. We did not want to follow this trend. I had a conversation with Tim Steiner [CEO of Ocado] and he said there was a break clause with Waitrose. We’ve since set up a joint-venture with them…it’s been a rollercoaster.”
Another major initiative to be undertaken by Norman is the overhauling of M&S’ technology infrastructure that has been hindering its progress. “When technology companies came to us we had to tailor it to M&S. It became a tangled mess. All retailers are seeing an explosion of spending on technology. Our budget is going up – it’s not out of control – because all big retailers have legacy systems. You realise your version of SAP is 13 years out of date and no longer supported. We’re doing a major systems re-do, which will give us new opportunities,” he says.
Leveraging customer data
These include being able to better leverage customer data to give a more personalised experience to each individual shopper. An increased focus on data across the retail industry has been picked up by Nikki Baird, VP of strategy and product at Aptos Retail, who says the focus on AI has led to the increased scrutiny of data by retailers. This includes reconciliation across different business areas and the improved collection of data in stores for loyalty programmes.
Baird says there is a renewed interest in recognising customers when they are in-store but for this they need to be incentivised to sign-up to such programmes. “They could be given first dibs on certain products and the holding of [exclusive] events is still vastly overlooked. There should be no discounts. Retailers are obsessed with discounts,” she suggests.
David Morgan, VP of customer value propositions at VusionGroup, is also reluctant to simply advocate discounting when discussing ESLs (Electronic Shelf Edge Labels). Although much publicity is generated about using ESLs for changing prices – including discounting of items like bakery late in the day to clear stocks – he suggests the digital labels could instead be used for messaging that nudges customers to making a full-price purchase.
“Price is just part of the mix. We’ve just introduced AI that enables the system to pick up what is not selling and what is overstocked and to create a message for the ESLs to display. If the price is cheaper than a competitor then we can push a ‘cheaper than…’ message. We’ve got a bunch of tools and it’s about how retailers use them,” he says.
Deterring in-store theft
Digital messaging is also playing an increasing role in the Intelligent Store solution from Diebold Nixdorf, which uses them to deter in-store theft at self-checkouts by nudging the customer to rescan items that have failed to be scanned correctly.
Matthias Wowtscherk, senior manager of media relations at Diebold Nixdorf, says the solution uses cameras to identity potential theft and advises the shopper through text messages and also a video of their questionable actions. These intelligent self-checkouts can be fitted with a mix of cameras that are individually used for reducing shrinkage, age verification, item scanning, and for creating a mirror image of the shopper as a psychological deterrent to committing fraud.
Shrinkage is the biggest driver of retailers updating their self-checkout solutions with these new capabilities, according to Wowtscherk, who says trials are taking place at the Intermarché SUPER La Farlede store in France. To date it has reduced shrinkage at self-checkouts from 3% to 1% and cut staff interventions by 40%.
Technology in-store is growing massively as digital and the physical store space becomes better integrated. Ariel Haroush, chair & founder of Future Stores, says this is manifested in the growth of retail media: “It has exploded because the ads are at the point of the customers’ intention to purchase. Seventy per cent of future sales will be digitally influenced and 71% of consumers expect personalisation in-store.”
He has sought to satisfy the appetite from consumers for more surprising and exciting propositions on the high street – melding digital with physical space – through the Future Stores model. These are stores rich with digital screens that can be changed from retail to event spaces “in the blink of an eye”. He has partnered with Intel, Renault and other brands to amplify their products on social channels as well as actually selling goods. Fifty Renault cars were sold over a weekend in the London Future Store. The outlets are very much about creating a community, according to Haroush.
Creating a community
The same could be said about Stuart Trevor, founder of Stuart Trevor, who is creating a brand from dead stock. Around these products he is promoting a positive attitude towards sustainable fashion. “Taking a negative approach to sustainable fashion is the wrong way. I like a positive world and to get people on-board,” he says.
This thinking emanates from his design studio in East London where he is determined to generate fun with events held in the space including live bands and drinks sponsors on-board that “builds a community”. The underlying aim is to turn dead stock into live stock and on this mission Trevor is having discussions with a growing number of brands including Superdry that need to do something with their excess inventory.
“We have brands that come to us. One million pounds of stock was brought the other month. It had been sitting [in a warehouse] for five years with the company paying fees for storage. Some companies come to us rather than have their products ending up in landfill. I’m trying to work with these companies,” he says, adding that he has also been talking to M&S, Patagonia, Oxfam and the British Heart Foundation about helping them navigate the changing clothing landscape.
Trevor believes part of this change involves the move by younger generations away from buying cheap, fast fashion from the likes of Temu and Shein and choosing more sustainable brands. “People are sick of buying things that fall apart,” he suggests.
Needless to say Peter Pernot-Day, head of strategic & commercial affairs for North America & Europe at Shein, does not agree and prefers to argue that low prices are “making fashion accessible to all”. He suggests the low prices on Shein are not a result of poor quality but are instead down to the business’s efficient model that is based on an on-demand supply chain, which focuses on micro-production runs.
These runs can be as little as 100 or 200 units and production will only be ramped up if certain signals are given from customer behaviour such as buying the product and the sharing on social media. “It prevents us from producing excess inventory. All feedback is fed back to the designer and products can be refined. We’re bringing the supply chain forward and the customer into the conversation,” says Pernot-Day.
Purpose and profit
The debate is very much ongoing about the future of Shein as it moves slowly towards its aim of floating on the stock market in the UK. Pursuing a very different path is food business Cook that James Rutter, chief strategy officer at Cook, says is successfully proving that business is not about profit or purpose but it is possible to achieve both.
He says this can be done by aligning the company values and customer values. When the company was formed in 1997 the company story was about home cooking and frozen foods. Up until 2012 Cook was about a traditional business story but then the story was turned into a responsible one.
“We picked up accolades, became a B. Corp, and kept growing. The company responsibility story did not take away from the sales. We’ve made sure responsibility is baked into the customer strategy,” says Rutter, who adds that the company’s culture is a genuine competitive advantage and it “amazes” him that other brands fail to understand this and take it on-board.
According to Rutter the recipe for being a responsible retailer and not killing your profit encompasses: making sure it is strategic and not simply symbolic; make sure it is owned by the company’s leadership; and putting your people first, ahead of shareholders and customers. “It’s not about transactions, it’s about connections,” he says.
Value of storytelling
The value of purpose and storytelling is also very much recognised by Steve Hewitt, former CEO of Gymshark, who says: “Product is important for an inventory-based business but in isolation it’s not enough. The fitness apparel world today is very cluttered and congested. The best brands in the world are about community and this is built through storytelling. Product is only part of the process. Purpose it also vitally important.”
He recalls that the focus on building a community through selling direct to its customers was what set Gymshark apart from the competition in its early days and made it a pioneer of not selling through myriad other third-parties that was the normal route for brands at the time. It was one of the first retailers to use Shopify as it carved out its own path.
Hewitt advises other retailers to learn from Gymshark in “keeping things as simple as possible for as long as possible”. Among other things this meant largely sticking to the online channel and a single geography. But he says for continued growth retailers must invariably move away from being a pure-play and take on other channels including physical stores. “I’d advise doing omni-channel in one market and then use the template elsewhere. You can’t stay a pure-play forever,” suggests Hewitt.
Utilising skill-sets
What Hewitt brought to the start-up Gymshark was his skill-set that he’d accrued from working in large corporates within the sportswear world. It was a similar story for Hash Ladha, former CEO of Jigsaw, who recalls joining the young pioneering online fashion retailer Asos in 2007 when it was doing £40 million in annual sales. He took the leap from working for an £800 million retailer to this relative minnow because he was curious about its new model.
“I learnt digital very quickly. It was a very small team and the other people were from tech backgrounds. They needed [my] fashion skill-sets. I took an appreciation for how they thought. This was a land-grab of brands and a land-grab of customers. We were looking to take over the world,” he explains.
During Ladha’s rise up the ranks of retail into leadership positions – he calls himself the accidental CEO – he says he has not wanted to be singled out for his colour. He suggests diversity and inclusion is at its best when there is an opportunity for everyone: “Where it absolutely rewards a business is when there is diversity of thought. The more though-power you have the better the results.”
