Insight from our Retail & E-Commerce LunchThursday, 24th May 2018
By Ilona Alcock, pro-manchester Sector Group Manager
It seems that every time you look at the news, another retailer is making the headlines. Whether M&S closing 100 stores, or Maplin going into administration, the outlook is generally perceived as bleak.
But is it really as bad as it seems? Or are other retailers finding new opportunities and continuing to adapt and grow?
Over 100 retailers and advisors came together at Manchester Hall for the annual pro-manchester Retail and E-commerce Lunch to discuss exactly these questions. Sam Booth, Deputy CEO at pro-manchester, opened the event and thanked MMU for sponsoring.
The event was expertly hosted by Jennifer Smith, Partner at JMW Solicitors and Chair of pro-manchester’s Retail and E-commerce Sector Committee. She introduced the first panel of the day: Colin Neil, Senior Vice President – Business Development, Adyen; Diane Wehrle, Marketing and Insights Director, Springboard; and Julian King, Head of Retail- Partner, Rider Levett Bucknall.
What trends did we see on the high street in 2017?
Wehrle commented that 2017 was an extension of the last three to four years: a reduction in football (although decreasing at a slower rate) and a move towards leisure experiences. Having been very product hungry over the last few years we have perhaps all just bought too much stuff! The challenge is now for retailers and shopping centres to adapt.
King agreed there is continuation of the trend towards online spending. RLB has surveyed all Tesco and Co-op estates to enable data driven decisions to reformat spaces. More retailers are also seeing the benefit of digitsing their navigation.
Having previously worked as a Director at Burberry, Neil commented on the importance of ensuring a consistent brand and operating model in all countries and on all channels. Transforming retail is difficult, Neil claims, because it is about transforming people. We all have different expectations and it is very expensive to change people’s behaviour. Wehrle agrees, likening it to moving a super tanker. Where all other spaces have transformed in the last 20 years, the big stores still look and feel the same. Instead of discounting, she argues retailers should investing in making the brand more exciting.
Neil echoed these comments in relation to payments: the way someone shops now is different to 10 or 20 years ago. Store payments and e-commerce are often run by different people and departments, which reflects the culture of the brand. Customer expect the same experience regardless of the channel or location.
What’s in store for 2018?
More technology! According to Neil, for example, customers will soon have the option of paying with their faces, creating the ultimate convenience. Wehrle believes there will be more consolidation in the sector: bringing stores, brands and leisure together. King is excited to see retailers embracing technology and innovating to stay relevant.
After lunch, Smith welcomed the second panel to the stage: Colin Neil, Senior Vice President – Business Development, Adyen; Guy Levine, CEO and Founder, Return; David Edmundson-Bird, Principal Lecturer in Digital Marketing, MMU; and Julian Smith, Founder and Managing Director, Bathroom Takeaway.
What has contributed to the success of new entrants to the market, like Bathroom Takeaway?
Really nice investors! Smith explains further that it was about finding the right people and the right finance at the right time. From an idea in April 2014, Bathroom Takeaway moved into its first property less than six months later and has doubled revenues every year since.
Having been run almost exclusively online, the business is now starting the process of opening more physical locations. Smith believes the combination of “clicks and bricks” gives credibility with consumers, and better valuations on exit.
What are the key trends in ecommerce?
Edmundson-Bird stated it is all about voice. Everyone buying Amazon Echo and customers can now order Dominos from every gadget on the market. Though he noted it works better in South than the North! He is also seeing a move towards multiple devices: consumers look at products on their phones on the commute, then buy from a laptop at home. The brand has to be consistent.
In China, no one is using cash anymore and the UK is starting to catch up and remove friction points in store. Starbucks allows customers to order from, and pay through, the app ten minutes ahead. Delivery is also key. Customers don’t just want same day delivery but two-hour deliveries.
Levine believes many operators are trying to use the same strategy for retail, online retail and e-commerce. They need different marketing and a better understanding of the customer journey. At a recent Google conference, their virtual assistant booked a hair appointment with no human interaction.
He comments that GDPR was only needed because retailers are happy with a 2% conversion rate, i.e. annoying 98 people out of 100! Smith agrees that companies need to build brands slowly and create value. He uses various marketplaces and advertising streams, reviewing ROI on a daily basis to maximise impact of a smaller budget than competitors.
Neil adds that payment has been an undervalued part of a business operation. Change only came about because it doesn’t work, or it hasn’t been updated for a long time. Now, global businesses are staring to understand they need one way of working and Adyen advises retailers to manage payments centrally for all stores in every country, plus app, plus desktop etc.
He also notes Manchester is a destination city for WeChat. With a billion monthly active users, and $5 trillion spent through the app last year, retailers cannot afford to ignore it. From working with Burberry, Neil saw the Northern market being neglected by most London companies and saw an opportunity to shake up the North West payments system. Adyen opened in Manchester earlier this year and is already growing.
How to sum up 2018?
As noted earlier, voice technology and convenient delivery will be key. Levine reiterated that the focus has to be on the customer first, and then using technology like voice if appropriate.
Edmunson-Bird believes we’ll see a move away from web browsers as the first entry to sale with the rise of gadgets like Amazon buttons and Alexa. Companies need to start building “Alexa skills” to complement traditional SEO and there is an opportunity to dominate the market. Levine recommends playing with new technology in its early stages but warns that regulation is struggling to keep up with technology.
It will be interesting to see how Manchester’s retail and e-commerce sector adapts to these developments, and pro-manchester will keep the conversation going at our upcoming Retail Distruptors Brunch, featuring Haagen-Dazs and Maniere de Voir.