Eight trends for 2019

The focus for the 2019 World Retail Congress is High Velocity Retail. In describing the ever-faster pace of change that is impacting on retailing, the theme also describes a new kind of retailer that has to emerge in order to win in today’s high velocity world.

But what does a retailer need to focus on if they are to transform themselves successfully? In our many conversations with senior retail leaders and industry experts about the challenges of the year ahead – and beyond - there are some clear and consistent themes that emerge. Here are the eight that, for us, stand-out as being the most important.

Customer-first

The phrase “customer-centricity” has been around for a few years now, but has returned with a powerful sense of renewed importance. You can come up with any new phrase you like, but what is now abundantly clear is that any retailer that is not obsessively thinking about, focussed on, talking to and serving their target consumers, then they will fail. That attitude was summed up best by Amazon’s founder and CEO, Jeff Bezos who spoke to all employees last November and predicted that the company wasn’t too big to fail and that one day “Amazon will go bankrupt”. But he went on to say that this demise will only really happen: “if we start to focus on ourselves, instead of focusing on our customers, that will be the beginning of the end”.

For Amazon, as it is for a growing number of retailers, the complete focus is on making the experience seamless, painless, frictionless and exceeding expectations. At the heart of much of this is the fact that retailers have to really begin to use data in a different way to fully understand their customers. But it is also an attitude of mind where you have to think about what Rodney McMullen the CEO of Kroger described as “serving the customer on their terms”. The winning businesses are those that are thinking about the positive experience a customer will have from you and how you are making things better and easier.

Being bold

This is not a time for incremental change. When the world is being re-shaped almost before your own eyes, the painful truth is that your competitors today aren’t the companies you thought they were. Some big retail businesses have failed in just the last 12 months and not just because their model has become redundant but more because they didn’t adapt and take big, bold decisions. Walmart, the world’s biggest retailer, retains that title because it has proved that even a business of its size can take some major steps and embrace change to stay relevant. Online giants Amazon and Alibaba are repositioning their businesses to bridge the online and offline worlds with Amazon Go and Alibaba’s Hema stores.

In brands we trust

Consumer loyalty to any brand in today’s highly-connected age has to be earned and constantly refreshed. It is no longer enough to believe that your brand holds a special place in consumers’ hearts simply because you’ve been around for generations. Today’s consumer, particularly millennials and Generation Z, want the brands they buy from to stand for something, to have a purpose that is delivered to consistently. Trust is the word spoken about more frequently than ever before when it comes to the successful brands of today. When speaking at this year’s NRF’s Big Show, Chip Bergh, the CEO of Levi’s set out his passionate belief that the Levi’s brand has to take a stand on the issues that matter to its core customers even if that means facing wider criticism. Issues such as gun control, the environment or encouraging voter registration in the US ahead of last year’s Midterm Elections. He maintained that “we lead through our values because it is the right thing to do”, calling this approach: “profits through principles”.

Getting personal

In an age of mass consumption, consumers increasingly don’t want to feel like part of the masses. Consumers are looking for products or experiences that they can choose, create or develop in partnership with the brands they select. Artificial Intelligence and data are increasingly powerful tools to understand customers’ personal preferences and Amazon continues to be the benchmark in this area. But as consumer trend forecasters, WGSN, say in their latest report “High Velocity Consumer” produced to support the 2019 World Retail Congress, retailers should pay attention to the fact that consumers are less interested in “personalised experiences” in preference to “personal experiences”. Consumers are looking for more human interaction and retailers such as Nordstrom and John Lewis are responding to this by increasing their in-store styling services. Nike’s House of Innovation stores in New York and Shanghai are vibrant responses to this demand for personal products and experiences.

A question of leadership

Transformation is now non-negotiable and the pressure is on retail leaderships to make increasingly big and bold decisions to deliver a new business model fit for a High Velocity world. As one retail CEO stated recently, you have to think on a regular basis about what would destroy your business so that you know how to make it more robust and capable of staying ahead of the game.

What is also clear is that the retail boards of the future have to have a mix of new talents that reflect the industry today. The World Retail Congress is working with top retail consultants at Green Park and OC&C to understand more about what the retail Board of the future will look like and the findings will be published in a major, exclusive report at the Congress. In particular, it will examine the increasingly important role to be played by Chief Technology Officers, Chief Digital Officers, Chief Data Officers and Chief Analytics Officers. The retailer of the future will also have to be more open to diversity and attractive to millennial talent.

The power of partnerships

Retail is, and always has been, by its very nature, one of the most competitive sectors of business. But given today’s challenges, retailers have come to realise they simply cannot do everything on their own now. Partnerships and alliances are now an increasingly important way for retailers to embrace a new sector, add related services or scale-up in a new area of technology. From Carrefour’s partnership with Google to escalate its Ecommerce capabilities to Kroger and Ocado, Harvey Nichols and its partnership with Farfetch and Walgreens and Birchbox to name just a very few, retail is discovering the 1+1 can if executed properly with the right partner come to equal more than two.

Transformative technology

If we’ve witnessed a technological revolution in the last decade, the speed of new developments means that we are standing on the edge of another massive era of change. And that era will be about how to harness Artificial Intelligence and robotics to automate the business. The scaling up of automation is already beginning across the industry with AI being used to speed up back-office and supply chain processes with greater efficiency being balanced against the downside of job losses. 2019 also started with a surge of announcements about the use of robots such as Ahold Delhaize unveiling that 500 robots will be used at its US stores, Stop & Shop and Giant. And then there is Voice which Professor Scott Galloway declared in his NRF address in January to be “the most transformative technology of the last 20 years”.  If the technology waves are hard enough to ride, the investment required will only escalate. Last year, Walmart spent $11 billion on technology making it the third highest spend in the world after Amazon and Alphabet.

Back to basics

With a new retail slowly taking shape around the world, there is a parallel pressure not to sacrifice the “old” in favour of the new. Retailing is an art and increasingly a science, but the old rules of retailing around great service, great people and product, attractive, well-maintained stores remain as true today as they did over generations. With evidence growing that Generation Z consumers like shopping in stores, the pressure is on for retailers not to neglect their human capital. It will become a powerful differentiator.