2020 VISION: how retail's continued transformation will look in 2020 and beyond - Retail Connections

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2020 VISION: how retail's continued transformation will look in 2020 and beyond - Retail Connections
2020 VISION:
how retail’s continued
transformation will look
in 2020 and beyond
2020 VISION: how retail's continued transformation will look in 2020 and beyond - Retail Connections
The future of stores in
                                                                                    2020 will primarily be to
                                                                                      deliver “what Amazon
                                                                                        can’t” in the form of
                                                                                       elevated experience,
                                                                                            brand story and
                                                                                  provenance, infused with
                                                                                    emotion and garnished
                                                                                      with high-value, data-
                                                                                  driven human interaction.

           ONE
2020 VISION: how VISION:     how totransformation
                 retail’s continued  re-energise retail   in in
                                                  will look   2019
                                                                2020and
                                                                     and beyond
                                                                         beyond
2020 VISION: how retail's continued transformation will look in 2020 and beyond - Retail Connections
THE STATE OF RETAIL:
EXECUTIVE SUMMARY

2019 has been described as the worst year on record for the
industry by the British Retail Consortium, capped off with poor
peak-trading performances from major high street chains including
John Lewis & Partners, Marks & Spencer, and Morrisons, coupled
with profit warnings from Joules, Superdry and Card Factory.

But looking forward 2020 promises to be a           successful. All retailers must also develop the
watershed year for the retail industry. It will     ability to exploit data, as this will be a key
be the year that we can expect the ‘retail          differentiator.
apocalypse’ headlines to finally begin in
plateau, or at least cease to pack the same         The future of stores in 2020 will primarily
psychological impact, not because the industry      be to deliver “what Amazon can’t” in the
ceases to be in transition, or that retailers       form of elevated experience, brand story
stop recalibrating their store estates and staff    and provenance, infused with emotion and
headcounts, but because the industry will finally   garnished with high-value, data-driven human
accept this process of evolution as the new         interaction. Meanwhile tech will increasingly be
normal. Online market share will continue to        used to fulfil common repeatable tasks, such as
grow as physical retailers continue to downsize     logistics, to ensure human capital can be spent
estates, reimagine their store formats and          more effectively achieving the goal of high-
expand online.                                      value customer interaction.

Meanwhile, pureplays will look to satisfy           Amid the shifting tectonic plates of retail, it
customer demand by becoming ever more               remains essential that retailers continue to track
personalised and friction-free, offering            customer demand and sentiment so that their
consumers a wide range of possibilities             needs can be met. To this end we’ve asked
stretching from product specification and           consumers what they want from retail. From
delivery method through to granular payment         our survey of 2,000 UK shoppers, conducted
options. Pureplays will also increasingly           in December 2019, there is an opportunity to
seek a physical foothold on the high street,        map out what factors should be driving retail
remodelling physical retail in their offline        decision-making in 2020, where the industry is
image, rather than submitting to the bricks-        currently excelling, and where it is falling short.
and-mortar rule book. Those retailers that
remain agile will prove to be the most customer
responsive, capable of flexing when customers
demand it.

2020 also promises to be the year that the
false dichotomy between on and offline retail
is finally put to bed. Our research shows
consumers are increasingly channel agnostic.
Retailers of every stripe realise they need to
be present everywhere if they are to remain
THE VOICE OF THE CONSUMER

                    The conventional forecast model of retail is no longer fit for
                    purpose. Retailers can’t simply take an educated guess at what their
                    customers want, based on what they wanted last season or last year.
                    They need a truly customer-responsive, data-based model that tracks trends and real-time
                    customer demand. Indeed, the most sophisticated retailers are already able to predict
                    customers’ future demand using artificial intelligence.

                    So, what is it consumers want in general? We’ve picked out some key stats from our in-depth
                    consumer research to illustrate the demands of today’s shoppers.

                                         37%
                                         don’t think about channel
                                                                                  31%
                                                                                  want help from store staff to
                                         they just want convenience               track down stock online and
                                                                                  order it for them

                                         68%
                                         say the high street wouldn’t be
                                                                                  52%
                                                                                  are irritated by checkout
                                         the same without shops                   queues

                                         32%
                                         insist shops should be a
                                                                                  28%
                                                                                  want in-store payments to be
                                         place of inspiration                     as friction-free as online

                                         46%
                                         are irritated by poor stock
                                                                                  28%
                                                                                  are annoyed if they’re asked
                                         availability                             to pay delivery for ecommerce
                                                                                  orders

                                         35%
                                         are frustrated by chaotic and
                                                                                  23%
                                                                                  will abandon their basket if the
                                         difficult-to-navigate store              online retailer doesn’t offer
                                         layouts                                  their preferred payment option

2020 VISION: how retail’s continued transformation will look in 2020 and beyond
TECHNOLOGY TAILWINDS

In 2020 it will be increasingly difficult to identify the conventional
boundary between tech and retail. For example, the retail sector
is already the UK’s tenth biggest investor in artificial intelligence
and the indications suggest this level of investment will only
grow during the year.

In the UK, US and other G7 countries the          to develop its Smart Platform warehousing
‘Amazon-ification’ of retail means that           and logistic solution which it has licensed to
leading retailers are eager to recruit software   Kroger and Coles in North America.
engineers, optical engineers, hardware
designers, data analysts, cyber security          Other examples of retail’s digitisation include
experts and experts in applied sciences.          the new CTO of Tesco, Guss Dekkers, who
                                                  previously worked at Airbus, Continental
Take the ecommerce fashion platform               and Volkswagen. Dekkers has been given
Zalando, for example, which is at the             the remit to “translate rapidly evolving
forefront of retail’s digital transformation.     technological and digital capabilities into
Zalando has made no secret of its ambition        innovative retail solutions”. Tesco’s Clubcard
to “become the Spotify of fashion”.               loyalty app has been digitised, allowing
                                                  customers to redeem vouchers using their
John Lewis & Partners is also keenly aware        smartphones. Shoppers can also pay for
of how tech is breaking down traditional          groceries and collect Clubcard points simply
sector boundaries. It has joined forces           by scanning a personalised QR code in the
with agricultural robotics specialist Small       Tesco Pay+ app.
Robot Company to trial robot harvesting at
Waitrose’s Leckford Estate farm.                  These are just some examples of retailers
                                                  and individuals harnessing the technological
Retail’s growing appetite for tech can be         tail winds of the fifth industrial revolution to
summed up by retailers like Ocado, who            propel their organisations faster and further.
now employ more than 1,300 tech engineers
So, what are the technologies that customers are looking for in
                   their shopping experience?

                   In the store, technologies that reduce                         from the likes of Amazon. Queue-busting is
                   queuing would appear to be the most likely                     something for both technology and design
                   functionality to enhance bricks-and-mortar                     companies to work hard on, judging by
                   experiences for consumers because at 52%,                      shopper demands for seamless in-store
                   queues remain the biggest bugbear for in-                      encounters.
                   store shoppers. Self-checkout options and
                   ‘scan and go’ capabilities, where customers                    When considering online technology,
                   can scan an item and automatically pay,                        consumers’ standards are high, with 31%
                   were the other top two technologies that                       abandoning their purchase and shopping
                   would improve customer experience. 27% of                      elsewhere if a retailer’s site navigation is poor.
                   shoppers said self-checkout would improve                      More than a quarter (28%) of shoppers get
                   their in-store experience while 34% called for                 annoyed when online checkout takes too
                   scan and go smartphone apps.                                   long and a similar percentage (27%) are
                                                                                  irritated if the online address and personal
                   Meanwhile, 28% of customers want faster                        details capture process is too onerous.
                   ways to pay in-store that replicate the
                   friction-free purchases now available online

2020 VISION: how retail’s continued transformation will look in 2020 and beyond
Speed is of the essence online,
and there’s one company that is
influencing expectations more than
any other, Amazon.
DEFINING AND DIFFERENT DESIGN

                 Design agencies are increasingly talking about incorporating
                 digital and technological aspects into their plans for stores, but
                 the fundamentals of retail design are changing too.
                 Storytelling and visual merchandising are crucial for creating a brand message in the store
                 – it was ever thus – but stores now need to make more of an impact in order to remain
                 relevant, and standards cannot slip, because consumers will pick up on it. If most items
                 can be purchased online, then the store needs to be a desirable destination that offers
                 experience, inspiration, and memorable interactions to create a point of differentiation – it
                 can’t stand still.

                 While stores are closing in the UK at what seems like an alarming rate, with PwC research
                 suggesting about 16 UK shops closed every day on average in the first six months of 2019,
                 and a net 1,124 stores disappearing from Britain’s top 500 high streets, shops still shine
                 bright for many companies.

2020 VISION: how retail’s continued transformation will look in 2020 and beyond
While many retailers are
closing, others are opening,
and at speed, with 144 store
openings in the first half of
2019. Here are four big-name
retailers who are prospering on
the high street:
       alue retailer B&M is in the throes of
      V
      a 50-store expansion plan bringing
      its estate to 670 in total. The retailer’s
      latest annual results saw revenue
      increase 17% to £3.5bn.

      Value homeware retailer The Range
       opened 31 new stores during 2019,
       adding 1,000 more employees to its
       books.

	Discount shoe retailer Shoezone
   added a dozen ‘big box’ outlets
   during 2019 and plans a further 20
   in 2020.

	Selfridges is also investing in the high
   street with a £20m cash injection,
   completely revamping all four floors of
   its Birmingham store.
DELIVERING THE GOODS.
                   If retailers are talking about ‘experiential’
                   retailing – of which there are varying
                   definitions – and designing store space with
                   digital retailing, customer touch-points,
                   events and services in mind, is that really
                   what customers want?

                   The answer, according to the research,
                   is “yes”. A greater emphasis on in-store
                   experiences was a recurring theme
                   throughout our research. 40% of consumers
                   say that in-store events would make stores
                   more exciting and attractive to visit. A
                   quarter called for more high-tech store
                   experiences while 24% said the stores that
                   are struggling are not offering experiences as
                   well as products.

                   A SOCIAL SPACE.
                   John Lewis & Partners recently unveiled its
                   radical new-look Southampton department
                   store that has replaced selling space with
                   “experience playgrounds” where shoppers
                   can hone barista or pasta-making skills or
                                                                                                                        Courtesy of John Lewis & Partners press office

                   hang out in a rooftop orchard and farm shop.

                   As well as conventional navigation, the shop
                   has also been designed to be navigable
                   by experience, in order to create a “social
                   shopping” environment in which to “wrap”
                   product. An experience desk on the middle
                   of the entry floor provides a launchpad for the
                   customer journey and a menu of options.

                   If successful, the re-modelled outlet could provide a prototype for other John Lewis &
                   Partners stores. Other retailers championing experience include Hobbycraft which hosts
                   group crafting sessions, Sweaty Betty, which runs free weekly fitness classes at its sites, and JD
                   Sports, which is building a reputation for in-shop DJ events that drive customer footfall from
                   its key demographic. Retail is not just selling – especially in speciality retail.

2020 VISION: how retail’s continued transformation will look in 2020 and beyond
DIGITAL SIGNAGE LIGHTS THE
WAY IN 2020

In retail’s race to digitise its stores, driven by calls for an
‘omnichannel’ set-up where stores and online are more closely
linked, digital signage has taken a giant leap forward in both
technology and in deployment.

Flagship fashion, electricals, and telecoms     SIGN OF THE TIMES.
stores – and quick-service restaurants – are
keen purveyors of this solution, viewing it     Almost a fifth of customers (19%) said
as an impactful way to welcome, inform, or      digital signage that showcases products
connect with customers.                         and provides a comparison with other items
                                                would improve the in-store experience,
Even WHSmith, a retailer that has come          while for those retailers looking for brand
in for criticism about its store layout and     consistency across their multiple sales
environment, has deployed digital window        channels it could be a winning option.
signage recently.
                                                More than a fifth (22%) of shoppers said
Whether it’s tech-enabled signage in the        they want to see digital signage in-store
window for marketing purposes, front-of-        that shows additional product details or
store wayfaring points, screens on kiosks, or   allows them to shop the wider range if it’s
high and large central video screens, digital   not available in-store – effectively replicating
signage is very often the clearest indication   online experiences in a shop.
of in-store technology.

                          Cosmetics retailer Lush this year unveiled what it described as ‘an
                          experimental, imaginative retail space showcasing Lush’s innovation in
                          technology’ at Tokyo’s busy Shinjuku station.

                          One of those new ways to shop is the store’s shoppable window, supported
                          by the recently launched Lush Labs app platform. Visitors use their
                          smartphone paired with app-based lens technology to browse and buy
                          products in the window and displayed on a one-metre-high LED screen.

                          The content broadcast on the screen is designed to change and reflect
                          the mood of Shinjuku, capturing the attention of passers-by.
CONNECTED
                 RETAIL
                 EXPERIENCE:
                 MORE THAN
                 JUST DIGITAL
                 SCREENS
                                 Here are three stores which
                                 opened in 2019 that paint a
                                 picture of the future of the
                                industry, providing examples
                              of what we might see more of
                               in 2020 and beyond. They are
                             stores hosting digital signage in
                            its various forms but with a whole
                              lot of connectivity, and design
                                      creativity to boot.

           ONE
2020 VISION: how VISION:     how totransformation
                 retail’s continued  re-energise retail   in in
                                                  will look   2019
                                                                2020and
                                                                     and beyond
                                                                         beyond
AUDI (HONG KONG)

Luxury automotive retailer Audi has opened an
‘innovation space’ in Hong Kong’s Festival Walk
shopping mall. Following the success of its pop-
up store last year, this ‘experience store’ takes
customers on a journey through the use of VR,
allowing them to explore the full range of Audi
models.

Customers can also preview future car concepts, which
helps to build brand loyalty. More than 40 models are
available for customisation and customers can view every
detail through a VR headset and even take their newly
designed car for a virtual spin.
CHANEL (PARIS)
                                                                                  Chanel’s new Paris flagship store is essentially
                                                                                  a test space for its newest digital initiatives.
                                                                                  The luxury brand has partnered with Farfetch
                                                                                  to trial clientelling tools that use data to create
                                                                                  personalised shopping experiences.

                                                                                  For customers, these are accessed via the Chanel app –
                                                                                  and the store is highly focused on its top tier customers.
                                                                                  In fact, the two top floors of the store are dedicated to
                                                                                  VIP customers only, with personal styling rooms and a
                                                                                  restaurant reserved for private meals.

2020 VISION: how retail’s continued transformation will look in 2020 and beyond
EVERLANE (NEW YORK)
Fashion retailer Everlane has opened its largest store to date and this New
York destination is packed with lots of new features.

There are tablets located around the store where customers can shop the full collection and
a mobile fitting room system called ‘Save My Spot’, where customers simply text what they
want to try on and are notified when the changing room is ready. With this store, Everlane
really is attempting to master the omnichannel experience.
CX APPEAL – WHO’S GOT IT?
                   The top retailers for in-store experience, as per our consumer
                   research, were Tesco, Sainsbury’s and Asda, which perhaps
                   reflects supermarkets’ ever-evolving propositions to change and
                   keep up with new consumer habits.

                   Be it through more extensive and special dietary product ranges, the launch of in-store
                   services such as click-and-collect, more fresh food, or partnerships such as Tesco-Jamie
                   Oliver, Sainsbury’s-Patisserie Valerie, and Asda-Sushi Daily, supermarkets are changing. They
                   aim to be as convenient as possible and offer as much choice and uniqueness as they can in a
                   challenging sector.

                   CX sells – the top ten retailers for CX

                             1.             Tesco (23%)
                             2.             Sainsbury’s (18%)
                             3.             Asda (17%)
                             4.             Marks & Spencer (M&S) (15%)
                             5.=            Aldi and Morrisons (14%)
                             6.             John Lewis & Partners (12%)
                             7.=            Argos and Lidl (11%)
                             8.=            Boots and Waitrose & Partners (9%)
                             9.             Primark (8%)
                             10.            Wilko (7%)

2020 VISION: how retail’s continued transformation will look in 2020 and beyond
The online top five, meanwhile, shows just how
  far Amazon is ahead of the rest in terms of CX, with
    the Seattle-based behemoth standing head and
  shoulders above others in the minds of consumers.

     1. Amazon (28%)
       2. Argos (9%)
3.= John Lewis & Partners
      and M&S (6%)
       4. Tesco (5%)
 5.= Next and Asda (4%)

                                              The fact that there’s not one standout
                                                 business in terms of in-store CX is
                                               indicative of the journey retailers are
                                              on to capture consumers’ imagination
                                                 with bricks-and-mortar. But if the
                                                 results are unflattering for stores,
                                                they are perhaps more alarming for
                                               websites. Amazon has set consumer
                                                expectations sky high, and there’s a
                                              CX gap for the industry to fill in terms
                                                       of its online offerings.
RETAILERS’ LONG LIST…

                   A complex set of challenges lies ahead for the retail industry, the
                   transition to experience-led shopping, digital transformation,
                   store restructuring and resizing, and the need to innovate and
                   compete not just with other retailers – but other entertainment,
                   leisure and hospitality providers.

                  In 2020, this route will be mapped out against                  Bonmarché, the fashion chain for over-50s
                  the shifting backdrop of Brexit, rising business                and department store Beales went into
                  rates, growing staff costs thanks to the National               administration in recent months putting
                  Living Wage and Apprenticeship Levy, so there                   thousands of jobs at risk. Hundreds more were
                  is no time to hesitate. All-encompassing action                 lost at Karen Millen and Coast, which closed all
                  plans are being devised, some big conclusions                   their stores after falling into administration.
                  being made, and some completely new
                  directions coordinated.                                         Other retailers including Mothercare, New
                                                                                  Look, Marks & Spencer and House of Fraser
                  The visionary direction being taken by Pets at                  have also been closing stores, while Debenhams
                  Home is a great example of this. The retailer is                is set to close more than 20 during 2020 .
                  pivoting away from a reliance on retail sales and
                  focusing on services and experiences such as
                  professional dog walking, nutritional advice and
                  pet spa treatments, to drive its business.

                  Meanwhile, fast food giant McDonalds recently
                  opened its first-ever UK kiosk-only store in
                  London’s Fleet Street. In a bid to manage
                  overheads, maximise space and streamline the
                  customer journey the digital kiosks are the only
                  way to order meals.

                  During 2019 Sainsbury’s was the first retailer
                  to launch a checkout-free scan-and-go store,
                  however the experiment lasted just four months
                  with the supermarket giant announcing that
                  customers ‘aren’t ready’ for the radical new
                  layout. Time will only tell whether other retailers
                  lining up to launch scan-and-go manage to
                  succeed where Sainsbury’s failed.

                  Meanwhile retailers have been downsizing their
                  workforces as they get to grips with the shifting
                  demand for physical retail.

2020 VISION: how retail’s continued transformation will look in 2020 and beyond
The visionary direction
        being taken by Pets at
     Home is a great example
     of retailer evolution. The
retailer is pivoting away from
 a reliance on retail sales and
     focusing on services and
          experiences instead.
In support of all this change, retailers must consider any number
                   of new innovations, formats, partnerships, or alternative business
                   processes. Joined-up thinking is required at every decision point.
                   Our study highlighted what consumers are looking for from a supply chain, payments,
                   security, last-mile delivery, and store/e-commerce perspective, which provides guidance for
                   retailers mapping out 2020 plans.

                   DELIVERING THE GOODS

                   Cost of delivery is far and away the biggest fulfilment pain-point,
                   with 47% of shoppers annoyed that delivery is not free.

                  Nearly a quarter (24%) would like to see more delivery options available.
                  While 21% say that products are not delivered in an environmentally
                  friendly way, for example with excessive packaging that may not be
                  recyclable.

2020 VISION: how retail’s continued transformation will look in 2020 and beyond
PERSONALISATION
AND PAYMENTS
    As far as consumers are
    concerned, payment is a
    necessary evil, which should be
    as fast and painless as possible.
    28% of in-store shoppers say that
    retailers still have lots of work to
    do to make the payments process
    in-store as friction free as online.

   15% of in-store shoppers said they would
   abandon an in-store purchase if the retailer
   didn’t offer their preferred payment method.
   Meanwhile 17% said they would like retailers
   to consider biometric payments (such as
   fingerprints or iris scanning) in store to speed
   up the payments process. 15% of store
   shoppers said they would like retailers to offer
   buy-now-pay-later options (such as Klarna,
   Openpay or Clearpay) for in-store purchases.

   Meanwhile, nearly a quarter (23%) of online
   shoppers told us they would abandon their
   purchase if the retailer didn’t offer their
   preferred payment method. This includes
   one-in-ten shoppers who will go elsewhere if
   one-click payment is not offered online. A fifth
   of online shoppers also say that retailers should
   do more to make the online payments process
   more friction free.

Retailers might be best served offering as many
transaction choices as possible. If they have coaxed a
shopper all the way to point of payment, losing them
because they don’t support their preferred transaction
choice could be deemed a careless scenario.
RETAIL WORKFORCE IN 2020
                   At the British Retail Consortium’s (BRC) 2020 conference, part of
                   a series of events and publications looking to provide a blueprint
                   for the future of retail amid increased automation, store
                   closures, and various economic pressures impacting the industry,
                   employment was the main foucs.
                   Designed primarily to highlight opportunities presented by ‘new retail’, the BRC shone a light
                   on what the structural changes and general direction of the industry means for the workforce.
                   It was, and is, an important focus, considering retail – despite the store closures throughout
                   the year – is still the UK’s largest private sector employer at three million-plus.

                   Associates were described as the most important people in the business, yet they have been
                   largely forgotten until quite recently. Conclusions from the event included store associates will
                   tend to work harder and smarter if they understand what the retailer’s mission is. Empowering
                   workers at the coal face and giving them a say in the business strategy ensures they improve
                   customer interactions in line with the company message.

                                                                                   Much of the talk of customer
                                                                                       centricity is led by the
                                                                                  boardroom which rarely meets
                                                                                   the customer; it makes sense
                                                                                  to engage store staff in these
                                                                                   policies because they are the
                                                                                    ones who know and interact
                                                                                          with customers.

2020 VISION: how retail’s continued transformation will look in 2020 and beyond
WHERE STORE STAFF ADD MOST VALUE
Consumers want store staff to offer a combination of the social, the functional and the
expert view:

               51%                          STORE NAVIGATION
                                            Showing me where to find products

               42%                          FRIENDLINESS
                                            Where staff were happy to engage in conversation
                                            as opposed to focusing on making the sale

               39%                          PAYMENTS
                                            Taking payments at the tills

               34%                          PASSION
                                            Showing genuine passion for the products or
                                            services the retailer offers

                31%                         STOCKS
                                            Assisting with out-of-stocks and ordering them
                                            online for the customer

As the likes of Zara add automation for online orders, and US retailers such as Walmart and
Lowes introduce robots for some shelf-edge and customer service tasks, the indication is
technology isn’t taking over yet. Lack of available staff and lack of knowledgeable staff were
bugbears for 37% and 69% of shoppers respectively, according to our research, meaning
people are very much in demand in the delivery of customer service.
RETAIL’S 2020 TARGETS:
                   SUSTAINABILITY, EQUALITY OF
                   OPPORTUNITY AND EMPLOYEES

                 SUSTAINABILITY

                 With the announcement of a climate emergency, the rise of
                 Extinction Rebellion and the ongoing Greta Thunberg effect,
                 sustainability and the environment commanded an ever-larger
                 place in the public’s consciousness during 2019 - and there are no
                 signs this is going away in 2020.

                 Consumers want to consume, but without it                        Ecommerce delivery was a major point of
                 costing the planet. This has led to predictions                  concern among those questioned with more
                 that the second-hand fashion market will be                      than a fifth (21%) saying they would pay
                 bigger than fast fashion by 2024, spurred                        more for greener delivery or they would be
                 on by a new breed of thrift-store digital                        happy to pay to offset the carbon cost of
                 marketplaces such as Depop, which enable                         their order delivery. 23% said they would
                 individuals and merchants to reintroduce                         actually spend more with a retailer that offers
                 unwanted garments back into the circular                         low-carbon delivery.
                 economy.
                                                                                  When it comes to physical retail, 28% of
                 Single-use plastic has been another                              consumers say that more environmental
                 battleground with retailers forced to keep                       initiatives that support greener retailing
                 pace with shoppers horrified by primetime                        ‘would make the store a more exciting place
                 documentaries that reveal the shocking                           to visit’.
                 impact this virtually indestructible material
                 can have.

2020 VISION: how retail’s continued transformation will look in 2020 and beyond
RETAIL DIVERSITY

Whether it is a push for more women in senior positions, the
drive to increase ethnic diversity at the top of business, or
measures to monitor and provide support for better mental
health and general wellbeing, retail has a role to play in
supporting social good, while promoting diversity and equality.

While the retail sector may do better in              The researchers examined racial diversity in
terms of boardroom diversity than some                retail and found, that the closer workforce
other industries, that doesn’t mean it’s great.       diversity at a store matches the diversity of the
Company policies, like a mandatory retirement         customer base, the better the store performs.
age and term limits for directors, or legal           In fact, for each percentage point closer to
gender quotas for board members like Norway,          a perfect match between the diversity of
France or Germany have introduced, have an            shoppers and store a retailer can increase their
impact.                                               sales by $67,000. But the study also found that
                                                      workforce diversity improves returns for stores
But diversity is much more than gender and            regardless of how diverse their customer base
age, and more diversity in leadership remains         is. Study co-author Prof. Patrick F. McKay of
a key issue. Who is represented in leadership         Rutgers University, believes “this shows that a
matters as it has an impact on company culture,       diverse staff brings different ideas about how
values, hiring practices, product, marketing,         to serve customers more effectively, which
along with virtually all business areas, as well as   enhances overall sales performance.”
public perception.
                                                      Retail Week’s recent publication of its Diversity
In retail, your workforce interacts with your         Super League named the UK’s ‘15 most
customers face-to face-and gives shoppers             inclusive employers’. Its ranking was based on
a very visible representation of the kinds of         criteria including the gender pay gap, LGBT
people your company values. We already know           and BAME networks, disability awareness and
that diversity in the office is beneficial because    board representation. The top retailers were
it leads to a diversity of ideas and better           The Co-op, Ocado, Primark, Lidl and Spar.
problem solving. But a recent study published
in the US Journal of Management finds a similar
correlation between diverse demographics in
shoppers and diversity in retail staff.
EMPLOYEES

                 Few retailers can afford to give their staff a day off by closing on
                 Sundays, like The Entertainer toy store chain, or hand ownership
                 of the company to workers, like Julian Richer, the founder of
                 Richer Sounds, did in April 2019.

                 Both examples – and there are plenty more                        Best retailers to work
                 illustrations of good practice of this nature in
                 retail – highlight a new-era business world,                     for in the UK
                 where bottom-line gains are clearly still
                 important factors, but the humanity of the                       1.    John Lewis & Partners
                 overall operation is greatly emphasised; after
                 all, it’s said that ‘people buy from people’.                    2.    Lush Cosmetics
                 With the advent of digital and increased
                 connectivity, people can work from anywhere                      3.    IKEA
                 and often expect to be able to do so – there
                 are calls for more flexibility in the workplace,                 4.    Marks & Spencer
                                                                                        Clarks
                 especially as a digital native demographic
                 enters the labour market.                                        5.
                 The recruitment site Indeed recently                             6.    Pandora Jewellery
                                                                                        Harrods
                 published its list of the best retailers to work
                 for in the UK with employees scoring each                        7.
                                                                                        GAME
                 company based on its work/life balance,
                 pay, job security, management and culture.                       8.
                 It’s no surprise that John Lewis & Partners
                 topped the poll. Lush Cosmetics, which is                        9.    Waitrose & Partners
                 well known for its ethical stance, cultivating
                 employee engagement and a stimulating
                                                                                  10.   The Body Shop
                 working environment, took second place,
                 helped along by a 50% staff discount. Here is
                                                                                  11.   TK Maxx
                 Indeed’s ranking in full:
                                                                                  12.   Gap
                                                                                  13.   Argos
                                                                                  14.   Post Office
                                                                                  15.   Sainsbury’s

2020 VISION: how retail’s continued transformation will look in 2020 and beyond
From this list we can deduce that great
retailers make employees feel valued, well
managed and part of a positive company
culture. Add to this formula the ability to have
fun and have a sense that you’re having an
impact that extends beyond the shop floor
and into the wider world.
TEN THINGS
                 FOR RETAILERS
                 TO THINK
                 ABOUT IN
                 2020.
                             Our consumer research shows
                            that successful retail businesses
                              will combine online and their
                             physical retailing estates in the
                           most organic ways. Retail winners
                           will be the ones that remain agile,
                               focus on offering customers
                              memorable experiences, and
                               evolve the way they are run
                               to meet the needs of a new
                                 workforce and consumer
                                      demographic.

2020 VISION: how retail’s continued transformation will look in 2020 and beyond
With that in mind, here are our top ten takeaways for retailers to
place top of mind as trading in 2020 gets under way in earnest:

1. 2020 IS THE YEAR THE MILLENNIAL COMES OF AGE: Forbes suggests that 2020 will see
   spending by Baby Boomers start to decline as the oldest members of this demographic reach
   their early 70s and the youngest enter retirement. This marks a watershed moment as tech
   savvy Millennials and Gen X start to become the most influential consumers. This means the
   business case for increased budget spend on customer-facing tech solutions is even stronger.

2. SUSTAINABILITY IS KEY: Consumers are becoming increasingly environmentally aware so
   sustainability must become a board-level consideration in 2020 for forward-thinking retailers
   with the impact being felt throughout the retail operation. Customers are actively looking
   for real evidence that retailers are taking the climate emergency seriously and adapting
   accordingly. If evidence isn’t forthcoming consumers are increasingly likely to shop elsewhere.

3. USE TECHNOLOGY TO LIBERATE CUSTOMER-FACING STAFF: Our research makes it
   clear that shoppers want more face time with shop-floor staff, but the only way to do this
   profitably is to create a tech/human partnership. Enlist technology to seamlessly execute
   tasks such as wayfinding, payment and sharing product information and liberate employees
   to add real value on top. This adoption of tech should be mirrored back-of-house to digitise,
   automate and increase accuracy for time-intensive repeatable tasks such as merchandising,
   promotions and pricing so employees can spend more time with customers.

4. BEWARE THE CUSTOMER EXPERIENCE GAP: Smart pureplay and omnichannel retailers
   are finding new ways to inject human value into online interactions. Mobile phone giant
   Three, for example, uses in-store sales experts to stream online product videos and Q&A
   sessions. The aim here is to nurture high-intent online customers who may otherwise
   abandon their basket.

5. FOCUS ON DOING ‘WHAT AMAZON CAN’T’: Amazon is great at convenience, speed and
   price but these aren’t the be-all and end-all of modern retailing. Physical stores, in particular,
   need to start their journey towards experiential retail now, if they have not started already,
   before Amazon finds a way to plug this gap.

6. PUREPLAYS ARE MOVING TO THE HIGH STREET: 2020 will be the year that digitally-
   native retailers and brands make their presence felt in bricks-and-mortar retail. This is a trend
   emerging in the US as well, with a study by Retail Dive revealing that pureplays plan to open
   850 stores Stateside by 2024. They’re coming and they’ll be playing to their own rules.

7. CHOICE IS KEY: Whether it’s online/in-store payment, credit at point-of-sale, delivery method
   or product specification, offering the consumer a full range of suitable options will be critical.
   As our research shows, retailers will ignore consumer demand at their peril.

8. A
    VOID OVER-PROMISING: In a retail world of ship from store, click & collect, one-hour
   delivery, and convenient fulfilment, marketing can no longer promise what supply chain can’t
   deliver. Customers won’t forgive retailers if they do, and transparency is paramount.

9. H
    AVE A CLEAR PARTNERSHIP STRATEGY: Create a partnership plan but don’t rule anything
   out. Choose your core tech suppliers or design organisation, but leave room for innovation,
   difference and agility by scouring the start-up scene and trying a ‘test and learn’ approach.

10. DON’T DISMISS THE UNFAMILIAR: retail design and retail technology are not traditional
    bedfellows, but increasingly they will be. WPP digital design agency AKQA buying a majority
    stake in Universal Design Studio and Map Project Office is a case in point.
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