15 Mar The Stream Series: The Future of Retail
There were so many interesting discussions to share from the recent Stream conference, but the one that inspired me most was on the future of retail. Around 50 retailers and those passionate about the industry came together on the Phuket Club Med lawn to reflect for an hour on the enormous change our industry has experienced in the last 10 years, and how that rate of change will probably be very minor compared with the 10 years ahead of us.
How can we as retailers prepare for and take advantage of this change?
1. Customer Experience
For the first half of the discussion we focused on the customer experience and how this has and is continuing to change within our industry. Retailing is no longer as simple as putting product on the shelf to sell. Consumers are demanding much more. We heard how the huge growth of fashion retailers like ASOS and Net-a-Porter who provide incredibly convenient and well curated shopping experiences online. We heard how flash sales sites like Gilt Group allow customers to trade slower delivery times and a reduced range for deep discounts. Then of course there is Amazon who is winning by offering amazing convenience, price and at the same time is disrupting major categories like books.
We were fortunate to have Sir Martin Sorrell join the discussion and he shared the fact that in 3 recent separate meetings with large retailers he’d asked them what their biggest concern was at the moment. All 3 answered ‘Amazon’. This is a retailer who is killing it by providing an incredibly compelling offer to its customers.
We heard how today’s consumer is thinking less about shopping “online or offline” and is instead wanting to use different channels for different things. I shared how at Shoes of Prey we’ve moved into bricks and mortar retailing because many of our customers want to be able to see, touch and try on our shoes before they buy, and they also appreciate being able to speak to someone to help guide them through the enormous range of choice we offer them when they’re designing their own shoes.
Bricks and mortar retailers are seeing incredible growth online. Despite the high cost of shipping nappies, Kimberley Clarke’s Huggies brand saw their online sales double in China from 10% of total sales in 2011 to 20% in 2012.
With the success of Amazon’s price checker app retailers are needing to innovate to avoid becoming show rooms for online players. Offering exclusive brands, vertically integrating as Apple have so successfully done, or offering unique experiences like customisation services were some examples given of ways to do this.
Analysing the examples we discussed we concluded that the best way to navigate all this change is to think through the customer experience and do everything possible to make that an amazing one.
2. 3D printing
The second half of the discussion moved to 3D printing and the enormous potential for change this brings to the retail industry.
With the incredible pace of development in 3D printing, in 10 year’s time it’s likely we’ll be able to cheaply and easily print products from a number of major product categories like homewares, children’s toys and even some basic electrical goods. As MP3s completely changed the music industry and eBooks are disrupting the book industry it’s likely we’ll see similar changes to other major retail categories once people can print these products at home.
Imagine the changes companies like Mattel or IKEA face when you can print your barbie doll or Swedish designed cutlery on your own printer at home. How will we deal with intellectual property issues in this situation? Will there be a Napster for design or will an iTunes or Spotify for design be developed? Who will do this? 3D printing is going to pose enormous challenges and opportunities for some major retail categories.
Another question was posed around how 3D printing will evolve. While there was some debate there was a strong view that we’ll likely all have 3D printers at home for printing basic products and these will be augmented by more advanced 3D printers at hubs in major cities for more complex products. I might print my barbie doll at home, but my power drill might be printed at a local hub and my car could be printed at my local car dealership. Who will build and sell all these home printers? Who will own these advanced printing hubs? Could a Fedex or DHL build a network of 3D printing stations and coupled with their delivery network, offer 3 hour delivery times for nearly all major product categories? Huge businesses will be built in this space.
Thinking beyond just the retail industry, Sir Martin Sorrell made the interesting observation that 3D printing may completely reverse the trend we’ve seen for manufacturing to move to Asia. Once we can print many of the products we consume, perhaps we’ll see manufacturing move back to the Western world and become something that’s done locally again.
This was one of the most fascinating, insightful and strategically defining discussions I as a retailer have ever had. Thank you Stream. :)