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Understanding RetailInverting the Kaleidoscope
Tarlok N Teji
September 2015
• Six interrelated dimensions
• Regulation & compliance
• Global influence
• Socio-demographic changes
• Physical dynamics
• Digital dynamics
• Customer Lifetime Value
• Summary - Trending for 2016
Agenda
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Social and Demographic
Global Influence
Regulation &
compliance
Digital dynamics
in
the Virtual World
Customer Lifetime
Value
Physical dynamics
(supply chains & retail space)
Take away #1 : Six multi-relational ‘Mega’ trends & ‘Giga’ shifts
Understanding Retail – Six Dimensions
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• Living Wage
• Business Rates
• Competition and Markets Authority (CMA)
• Financial Conduct Authority (FCA)
• Serious Fraud Office
• Grocery Supplier Adjudicator
• Bribery Act, Data Protection & Privacy
• EU Directives
• Consumer Credit
• Sunday Trading
• Trading Standards
• Fair Trade, Organic, GM
• Weights & Measures
• Health & Safety, Public Liability
• Hazardous Materials
• Food Safety, Product labelling
• Imports & Freight
• Customs & Excise, VAT, Corporation Tax
• PAYE, NI & Pensions
• Waste (weee etc.), Carbon Reduction
• On and On and On and On ……
Take away #2 : Business complexity and Consumer confusion
Dimensions shaping the retail landscape
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Dimensions shaping the retail landscape
Can you name the Top Ten
Global Retailers?
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Dimensions shaping the retail landscape
Rank Company Country Net Revenue US $m
1 Wal-Mart U.S. 476,294
2 Costco U.S. 105,156
3 Carrefour France 101,844
4 Tesco U.K. 100,213
5 Schwarz Germany 98,662
6 Kroger U.S. 98,375
7 Metro Germany 86,393
8 Aldi Germany 81,090
9 Home Depot U.S. 78,812
10 Target U.S. 72,596Source: Global Powers of Retailing 2015, DTT, London – adjusted for group revenue
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Dimensions shaping the retail landscape
• Travel & TV expanded tastes and desires
• Mobile & Internet has democratised information
• UK Brands are now global e.g. Burberry,
Jaguar
• Sovereign Wealth Funds & overseas investors
buying UK assets (Harrods / House of Fraser /
New Look)
• Labour and capital flows in EU
• Luxury in Demand
• Middle Classes in Emerging Economies
(BRICA)
• Water, Food & Fuel diversion to BRICA
• Competition from overseas retailers
• Overseas shoppers wanting UK products
• Search for Value and Values
• Global economic contagion
• UK Retail sector cannibalisation
• Retail growth is either International or Mobile
(excluding discounters)
Commodity Price
Pressure & Scarcity
Take away #3 : Global influence on UK performance continues
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Dimensions shaping the retail landscape
• Order Lead Times
• Ethical Sourcing & Supply
• Efficient Consumer Response
• Delivery & Collection
• Click & Collect
• Home delivery, defined delivery windows
• The last 100 yards
• Returns & recalls
• High Street v Out of Town v On-line via mobile
• Leasehold obligations, Business rates & utilities
• In-store design, Environmental footprint
• Structural shift in property development and
shopping centre ownership
• Community engagement
• Re-imagine the high street
• Over supply & capacity of shop space
Take away #4 : Space and Speed the final ‘physical’ frontiers for retail
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Dimensions shaping the retail landscape
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
WestfieldStratford
1.9m
Eastgate& Clarence
Leeds2.7m
Metro CentreGateshead
1.8m
Trafford CentreManchester
1.8m
thecentreMilton Keynes
1.8m
Bluewater Dartford
1.7m
WestfieldWhite City
1.6m
Princess & Charles SqBracknell
1.5m
ArndaleManchester
1.4m
MeadowhallSheffield
1.5m Cabot CircusBristol1.5m
LakesideThurrock
1.4m
Liverpool ONELiverpool
1.4m
St. DavidsCardiff1.4m
East KilbrideGlasgow
1.2m
Bullring Birmingham
1.1m
WestfieldDerby1.1m
HighcrossLeicester
1.1m
WestfieldMerry Hill
Dudley1.1m
Eldon SquareNewcastle
1m
KingfisherRedditch
1.1mThe CentreLivingston
1m
The FestivalBaingstoke
1m
Telford1m
Retail Capacity Supply increases over 45 years
Top 25 Shopping Centres by Square Feet
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Dimensions shaping the retail landscape
54m ft2
New Retail
Space * Just from the Top 50 sites - there are over 200 in the UK
Take away #5 : Retail space supply exceeds demand
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Dimensions shaping the retail landscape
Flat Spend Trend
Take away #6 : Consumers search for Value and rediscover their Values
• Recession and income squeeze
• Better travelled, educated & informed
• More mobile and technology savvy
• Diversity through immigration
• EU labour movements
• Decline in birth rates
• Ageing population
• Overweight
• London and South East v Regions
• Long-term affluence and wealth increase
• Debt reduction
• Home ownership increase
• Unemployment increase –
youth & females
• Shopping by mission
• Complexity :
• Age;
• Gender;
• Life-stage;
• Life-style; and
• Disposable Income
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Dimensions shaping the retail landscape
Source: Office for National Statistics
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Food
Dimensions shaping the retail landscape
Source: Office for National Statistics
Clothing & footwear
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Source: Office for National Statistics
Dimensions shaping the retail landscape
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Dimensions shaping the retail landscape
Source: Office for National Statistics
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Dimensions shaping the retail landscape
• Living in a ‘virtual’ world
• Future store is on the mobile device
• Shop anytime, anyplace, many ways
• Permanently connected digital world
• Mobile will be the primary medium for
Internet access by 2020
• Many places skip fixed line e.g. India, Africa
• Rush for ‘ePayment’ solutions
• RFID & Near Filed Communications (NFC)
still to arrive (i.e. Tap & Go just starting)
• App dominated but full with risks
• Big Data debate
• Personalisation v Privacy
• The ‘big issue’ is Authentication of:
• People;
• Organisations; and
• Products
• Cybersecurity: Spiral of Fraud & ID Theft
Take away #8 : Mobile is a bigger wave of change than the internet
‘δTailing’ = digital retailing
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Amazon eBay email Google Facebook iPhoneWebcam Spam Blackberry broadband YouTube
Bluetooth Skype HD plasma text PS3 Twitter Wii Blog 3D MySpace mobile HD plasma eBay
Bluetooth Facebook Google text Twitter WiiGoogle webcam Spam Blackberry Facebook3D Amazon mobile Windows email iPhone
HD plasma webcam Skype PS3 YouTube textMySpace Blackberry Twitter text Google Blog
eBay email Blackberry mobile YouTube Wii PS3Facebook Bluetooth Skype HD plasma iPhone
Broadband Skype YouTube Bluetooth spam Wii
The data volumes are so big we
need new words of measurement Zettabyte1,000,000,000,000,000,000,000 Bytes
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Dimensions shaping the retail landscape
• Exponential Times
• Speed of Change
• Mega Trend – it’s a Giga shift
• Global
• Ubiquitous – 7bn+ devices
• $Trillion industry
• Internet of Things
• Habit Changing (Wallet/Purse, Keys, Phone)
• Hidden complexity and risk
“In the USA, the average eight to 18 year old spends 11 hours a day
with a screen in front of them….”
Professor Michael Solomon, Hot Topics in Branding and
Communication, May 2011, MBS
Take away #9 : mobile device is the ‘screen of life and remote control’
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Dimensions shaping the retail landscape
Transparency, Trust and Expectations
• Loyalty – Cards, Coupons, Offers
• Big DATA and context marketing
• Word of Mouth: SMS, Facebook, Blogs & Twitter
• Customer Service
• In-Store effectiveness
• Call Centre effectiveness
• On-line effectiveness
• Information & Honesty
• Power & Trust
• Keeping TRUST
• Share of Wallet:
• Brand and Range extension e.g.
• Non-Foods
• Petrol
• Mobile & Utilities
• Financial Services
• Brand dilution and boycott
Take away #10 : Trust and privacy are the future battlegrounds for
consumers hearts and minds
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Social and Demographic
Global Influence
Regulation &
compliance
Digital dynamics
in
the Virtual World
Customer Lifetime
Value
Physical dynamics
supply chains & retail space
Take away #1 : Six multi-relational ‘Mega’ trends & ‘Giga’ shifts
Understanding Retail – Six Dimensions
Mobile, Velocity,
Experience and
Innovation
Summary -Trending 2016
• Mobile
• Velocity
• Experience
• Innovation
Wearable Tech
Internet of Everything
Security
Speed to market
Speed to respond
Speed to deliver
Entertainment
Emotion
Education
Enlightenment
Engagement
Market disruption
Made to order
Customer Labs
Adaptation
Change