What: A roundtable on how retail contributes to the branding and not in the experience only.

Why it is important:  Boring physical retail is dead. Exciting and well-designed physical retail is the future.

After the pandemic-induced setbacks, retail footfall is rebounding globally, but with a twist. Consumers now seek a fusion of experiences, discovery, and a sense of community in physical retail spaces. The integration of digital and physical elements is crucial for the future of retail. The key insights are:

1. **Integrating Data Analytics Simply**: Retailers should start by understanding basic data like footfall, conversion rates, and customer preferences. QR codes and other simple tools can bridge the gap between physical and online experiences.
2. **Prioritize Product Offering and Omnichannel Availability**: Customers value product availability and choices. A seamless and engaging in-store experience cannot be replaced by online shopping, but both should complement each other.
3. **Building Consumer Loyalty Through Events**: Hosting events at retail spaces can build strong customer relationships and loyalty. Bringing relevant people like designers, founders, or influencers to connect with customers in real life adds authenticity.
4. **Enable Consumer Discovery and Surprise**: The younger generation seeks experiences, storytelling, and community in physical retail. Technology such as smart mirrors or apps that personalize the experience adds novelty.
5. **Understanding Local Communities**: Tailoring the store’s offerings to the local demographic is important. Every location has its unique characteristics, and understanding these can help in serving the local customer base effectively.
6. **Incentivizing and Empowering Store Associates**: Well-informed and motivated store staff can provide invaluable insights and build relationships with customers. The roles in physical retail are evolving and should be aligned with the values of the younger generation. Also, employing technology like iPads to provide up-to-the-minute information to customers is beneficial.
7. **Sustainability and Value Alignment**: Especially among younger consumers, sustainability and value alignment are key. They are more likely to engage with a brand that has a positive impact.

In conclusion, the retail landscape is evolving, with the integration of physical and digital experiences being critical. Understanding and engaging with the local community, providing a variety of products, hosting events, and empowering store associates are some of the strategies for retailers to thrive in this new era.

The role of retail in brand building today 

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The IADS attended the latest edition of the World Retail Congress in Barcelona, during which the Association had the privilege to moderate a roundtable dedicated to the future of department stores, with the CEO of Steen and Strøm in Norway, the CFO of Matahari in Indonesia, and the Deputy Chair at John Lewis in the UK.

This edition was also the opportunity to listen to great leaders and hear their insights. Below is a selection of the most interesting lessons we took home.

The WRC is one of the global events where every retail professional gathers to hear about the latest trends and grasp the industry mood. This year’s theme was dedicated to resilience and the leadership needed to navigate the “extraordinary times” we live in. It was the occasion for 750 attendees from 40 countries to listen to compelling presentations from leaders, sometimes disarmingly honest when it came to acknowledging the toll taken on them by the role today.

During his opening speech, the chairman and CEO of Tendam set the tone, as he advocated for leaders to embrace every change, be it customer behaviours, technological disruptions or sustainability issues, and find very agile solutions to face these challenges, in the most efficient way possible, but not at any cost. He insisted in a very compelling way on the fact that leaders should never lose sight of their ethics, as they should lead by example. This is all the more important that the retail leaders’ role now goes beyond the P&L: they have a responsibility in changing society and contributing to its transformation, a clear evolution from the past (and a Herculean one, when combined with the need to ensure business continuity and prosperity).

After an overall presentation of the global economic situation, three main themes emerged from the various presentations the IADS attended:

-    How brand storytelling is evolving from a purely growth-oriented purpose by showing how brands offer the best options to customers, to a broader message explaining how they are contributing to the general evolution of societies and well-being,

-    How tech is impacting businesses, with down-to-earth use cases, but also some messages of caution,

-    How retail leadership has transformed in order to help organizations navigate troubled times in the best way possible, involving sometimes that leaders themselves should question their approach and change.

Introduction: a global overview of the world situation

The Global Chief Economist at Deloitte drew a rather extensive picture of the world situation and the impacts on retail.

While inflation has increased in the past 2 years to the highest levels in 40 years due to various factors (pandemic, supply chain impact, durable goods prices surge, war in Ukraine), he was confident that the peak was behind us and that inflation should decrease. He was wary however that the labor market had not contributed to inflation so far: technically, a situation where there is a demand for labor should have led to a surge in wages, not the contrary which is what is currently happening, as prices are decorrelated from salaries.

He also addressed the risk of recession for the US, which was low in his opinion thanks to the stability of customer spending (fueled by their savings), and the strong balance sheets of businesses. On the contrary, Europe was more at risk, due to the much higher levels of inflation, and with Russia weaponizing gas and raising prices, thus forcing governments to increase public spending to support populations. Italy and Germany were, in his views, the countries most at risk. With the ease of Covid-19 restrictions, China had started to recover, even though there were some headwinds (weak global economy, supply chain disruptions, demographics and trade disputes) which could lead to a pivot in globalization, with global companies shifting assets from China to Southeast Asia, reflecting the decoupling that is already taking place in tech.

He concluded by reminding the audience that 2022 was the first year during which climatic events truly disrupted the world economy on a large scale, and that should become a norm in the future.

The brand storytelling evolution: from a business competitive advantage to a social involvement

The Chairman and CEO of LVMH’s Selective Retailing Division (which includes Sephora, DFS and La Samaritaine, Le Bon Marché department stores) explained that he did not see his role, and his businesses, as being a retailer, but rather a brand builder. In other words, the more stories he was able to tell the world, the more affinities he could create with the customer.

This rather classical approach to storytelling was twisted when the CEO of The Body Shop dynamically reminded the audience that being sustainable, the DNA of the brand since its inception, also involved concrete measures impacting how the company was interacting with society at large. An example of this was shared through the company’s recruitment process, (The Body Shop boutiques accept any person willing to work, especially the ones excluded from the job market), which he made part of the brand storytelling. For him, the social involvement of the company (and its public promotion) is a way to “appeal to customers who embrace the values we embrace too”.

Rather surprisingly, the Executive Vice Chairman of Shein had a similar approach to explain how his “on-demand retail business”, involving small factories, production on demand and promotion through social media was actually impacting society in a positive way:

-    From an environmental perspective, by reducing production waste (in terms of material consumption but also unsold products) and encouraging customers to engage in circular consumption,

-    From a social perspective, by proposing + size collections and promoting diversity,

-    From a job perspective, their different business model was seen as a strong element of motivation for their staff, who believed that Shein’s new approach could change the industry.

He concluded by mentioning that Shein was seeing itself as an agent of change, and that they were ready to influence other players in the market so that the industry could change. The audience’s reactions to those remarks were mixed.

Tech is a necessity, but not an end-game

AI and ChatGPT were the stars of the show in many presentations. The Chief Technology Officer of Zalando explained that ChatGPT was already used for product recommendations as their motto is to “use the new tech before the user does.” He shared that AI should be taken very seriously, as it will force businesses to rethink the way they operate, what they want and can do with the data they collect, and how they make sure it makes sense for the customer. For instance, he mentioned that call centres were clearly disrupted as Zalando was considering replacing them with chatbots.

However, he insisted on the fact that tech evolution is, in essence, a cultural change. This means that teams have to be motivated in the process of change, with full transparency, making sure they understand the goal, and share the same ambitions. He was very wary to remind the audience that AI would never help to solve all the issues by itself.

This is a view that the CTO and co-founder of Uber shared, while encouraging the audience to test, try and learn. For him, we live in the best moment to innovate, and retailers anyways do not really have the choice: if they do not do so, someone else will do it for them. This is the reason why many initiatives are taking place, from metaverse (which he saw more fit for gaming than anything else), to VR/AR, or NFTs (even though the current applications were disappointing).

A Doctor of Machine Ethics at UC Berkeley echoed that encouragement to test and try, explaining that this was the approach Microsoft or Google had when developing Large Machine Learning models. They sense that Generative AI is going to replace part of the tech stack, that they can learn and customize at scale, but for now, what is possible to be done and how is not yet fully understood. For that reason, every player, from the largest retailer to the smallest start-up, has a chance to run the race (a position echoed later by Bill Gates about the fact that AI could kill both Amazon and Google in a Tweet last May).

The human aspect of tech was left behind during these presentations, which made IKEA Retail (Ingka) Chief Digital Officer’s speech very interesting. By reminding that the company’s DNA was to “create a better everyday life for the many people (they serve), through affordable, sustainable and accessible products”, he explained that the company had the will to “responsibly approach automation”. In other words, make sure that automation and tech is used to improve IKEA’s employee’s employability in the long run, because the company believes that talents and people are scarce.

While IKEA started their digital transformation late (in 2012, with a dedicated digital organization only emerging in 2018), things advanced very quickly: 80% of IKEA customers start their journey online, and e-commerce represents 20% of the business (vs. 9% pre-pandemic). This is why they have developed many new innovations:

-    The paper catalogue was ditched, and replaced with 3D creative apps that allow phone users to virtually visualize the products they want in the actual locations where they want them to be,

-    Store inventory was tracked with autonomous drones, which improved security at work, self-replenishment, as well as contributed to reducing overwork,

When it comes to data and artificial intelligence, he candidly mentioned that they wanted to leverage AI to improve business efficiency, but without losing sight of workers. This implied that they did not have clarity on what this meant or how, yet.

The transformation of leadership and how to manage customers and teams

During a roundtable involving the CEOs of AWW Group (Pepe Jeans, Hackett, Façonnable), the President of Aerie (American Eagle Outfitter Group), the CEO of Marks & Spencer, and the CEO of Wumart, a 2,000-large Chinese grocery and supermarket chain, the evolution of leadership was discussed, and in particular how to convince loyal customers in a change process.

The conversation was very hands-on and honest: Marks & Spencer shared that the message about their new loyalty program was confusing customers who believed that the app itself was the program. Another example was the cashless cafés introduced by M&S to show its technological advancements, which were not understood, let alone used, by its traditional customers. The CEO of Aerie reminded the audience that whatever tech was on the table, people are needed to operate it, and that involved an inertia that had to be taken into account by leaders during the implementation process. During another talk, the CEO of Primark described his role as to “challenge technology and make sure the company does not move too fast for the customer”.

The chairwoman of The Lane Crawford Joyce Group tackled the other side of the coin, the people in retail organizations. She described her organization as “a business where you pay people to grow.” In other words, her job is to create a platform where people learn and grow. This translated into a retail academy where Lane Crawford employees can learn basic retail maths, manage 1:1 relationships, learn how to make content creation and use AI, but also have access to mental health and wellness programs.

The most emotional talk however was with Frasers Group’s CEO. While being honest about the fact that the context was challenging, he was candid about his role and how he had to make the right decisions about distributing brands and operating stores:

-    Are they relevant for the business?

-    Do they positively contribute to the distribution?

-    What do they bring to the structure?

He was honest about the fact that such filters were difficult to apply, especially when he had to close stores and lay off workers. To do that, it required being fully transparent about the economic conditions leading to such a decision. He reminded that the “P&L does not prime over moral and support for people.”

When it came to the department store format, he mentioned that for him, the model is far from being broken, but it can become very unproductive past a certain size as he discovered with House of Frasers. This is why in 2nd and 3rd tier cities (<100,000 people), he renegotiated leases with landlords and brought Sport Direct at the entrance in order to boost traffic.

Finally, he also mentioned the launch of Frasers, a loyalty program combined with payment capabilities, that will be available across all store formats (House of Fraser, Sports Direct, Flannels) which will also be sold under a white-label solution to other retailers.

What to remember from this WRC edition? The key takeaways were centred around calls to more transparency, collaboration and cooperation between retailers. The Chairman and CEO of Tendam even mentioned it in his introduction speech, by reminding the audience that “retailers cannot move alone” and it was the time to “develop alliances, as the world is becoming too complex to succeedalone.” This is exactly what the purpose of the IADS has been since its inception, and what we have been trying to bring to our members since the reinvention of our activities in 2020 into a more business-oriented and hands-on expert structure tackling topics together.

Another interesting thought was also the amount of risk that retailers had to willingly take if they wanted to succeed, as reminded by Mindy Grossman, who was inducted at the WRC Hall of Fame, and who said that taking risks was better than not taking risks and trying to cope along the way. Such an approach could be lethal for retailers today.

Extraordinary times indeed!

To go further:

WRC CHAIRMAN REPORT

Credits: IADS (Selvane Mohandas du Ménil)

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Private shopping is nothing new to retail. Think high jewellery and watchmakers, they have always traded in discreet ways. More recently, luxury flagship stores have increasingly developed private lounges. While they used to be opulent rooms with comfortable sofas, they have transformed and expanded into private floors, private apartments, and finally, full private stores that are only accessible to a limited list of VICs. This comes as an evolution for big spenders’ shopping habits. On one hand, top customers tend to spend more, hence expect to be treated accordingly. On the other hand, the pandemic created a new demand for one-of-a-kind or, at least, special experiences.

Besides, in an environment where luxury brands intend to increasingly go direct-to-consumer and where resale is gaining traction and is considered a more responsible shopping behaviour, private retailing represents an additional and crucial strategy for brands to make a difference in the way they consider their best customers.

While Covid accelerated luxury consumption, the private retailing trend is here to stay. Many options are available from full private stores, private suites and salons inside of the stores, to confidential retail spaces. The IADS pulled together the most relevant examples of what private retailing offers at the moment.

Private retailing in department stores

In close partnership with luxury brands, a few department stores were early adopters of private retailing. In different ways, Harrods and SKP are fair examples, both happening in China.

The Residence: Harrods outside of Harrods

Back in 2020, at a time when Chinese consumers were unable to travel to the UK, Harrods started a new format in China. Called ‘The Residence’, the concept was tested first with a 3-day pop-up store initiative during Shanghai Fashion Week, which soon transformed into a permanent space. The project, strictly invitation-only to its top-tier clients, consisted of stockless VIP lounges and showrooms, including personal stylists, exclusive collections and areas for customers to invite and meet with their friends, and even host dinner parties. The concept soon expanded to Beijing.

The reasons for such a strategy were to keep in touch with wealthy customers and increase brand recognition. Also, the company anticipated that, with the degrading relationships between the US and China, the UK might become a more enticing destination for affluent Chinese in the future. It was also a smart move since there is no physical stock to be found at The Residence: the department store counts on its relationships with brands to locally supply the products sold.

Luxury brand ‘social clubs’ at SKP

A few months ago, Chanel revealed its plans to open private boutiques dedicated to their VIP customers, starting in Asian cities in early 2023. The long queues in front of every Chanel store hardly represents a nice luxury experience so the news of this new exclusive experience didn’t come as a surprise. Besides, with only 250 stores worldwide (compared to 400 Louis Vuitton stores), Chanel has a relatively limited retail footprint, hence the need to take measures to accommodate the upper part of its growing customer base. To support its retail expansion, Chanel plans on hiring more than 3,500 new employees, many of whom will be sales associates.

In Fall 2022, the initiative was first implemented at SKP in Beijing where Chanel (along with Louis Vuitton and Dior) took over the third floor of the building to open a VIP-only store. What’s more interesting is that it is not as visible as one would expect, as the store is not dubbed Chanel but ’31 Cambon’: the reference to the historic boutique in Paris is highly challenging for non-Chanel shoppers to grasp, and that’s obviously the goal. The collections are displayed as if in a lavish art gallery with artisanal tools demonstrating the brand’s know-how and craftsmanship.

At Dior, the private boutique consists of 3 rooms only accessible upon reservation for a limited number of loyal customers. As for Chanel’s ’31 Cambon’, Dior’s salon concept is totally different from the usual boutiques. To showcase and emphasize the brand’s culture, the concept takes cues from an art gallery reminiscing of the Designer of Dreams wall created for the namesake exhibition. Besides sales service and consulting, these private stores are also meant to entertain VICs: private trunk shows and pre-orders, friends’ gatherings, birthday surprises, and educational courses. One VVIC (very, very important customer) of Dior shared her retail routine. Whenever she wants to buy something her sales assistant books her one of the 3 salons. She is welcomed with pre-selected items in her size, but also with her favourite sweets and drinks. Big spenders become addicted to such swanky treatment. And since being a VIC is not forever, the top customers are pushed to keep up with their purchase volume to maintain their status.

Private retailing as developed by big names

Brunello Cucinelli’s hidden Casa Cucinelli

Following the opening of a similar space in Milan before the pandemic, Brunello Cucinelli opened an invitation-only store in New York in December 2021 to emphasize private shopping for its most loyal customers. Located on 689 Fifth Avenue, the space at street level is not occupied by the Cucinelli store (but rather a Canada Goose). Actually, one will find it hidden on the 9th floor of the building. The Casa Cucinelli apartment space is designed so that top customers feel like they are at the designer’s home. Guests are first invited into the lounge, immediately leading to the kitchen. The rest of the apartment includes a living room, a study room and a dressing room where everything can be acquired.

From Dior to Cartier: renovated Paris flagship stores develop unprecedented private spaces

In 2022, Dior and Cartier in Paris offered 2 versions of a luxury revamped flagship. In Spring 2022, Dior reopened its store on the opulent avenue Montaigne. On top of haute-couture and private salons, the ‘Suite Dior’ is a private apartment whose keys give guests the full run of the building, with dedicated staff of six to eight people around the clock, ranging from chefs to personal shoppers.

Cartier’s 6-floor, 3,000 square meter newly renovated historic store located on rue de la Paix, is also a relevant case for private retailing. The 5th floor of the building is a completely private floor called the ‘Residence’, an apartment consisting of a dining room, a lounge, a large kitchen and a winter garden. It is designed to host exclusive events, a party for a client, or a product launch with VICs. The 4th floor is also dedicated to top customers: it hosts an archive space where they can discover old drawings, mood boards, books and old photos. The other floors’ breakdown is quite classic, with each floor having at least 2 private salons. Called ‘Prestige’ and dedicated to high jewellery and made-to-order, the 2nd floor has a special salon for bespoke jewellery: customers will decide on their projects there thanks to an inspirational library and archive pieces, and they will discover their unique creations in a rather impressive cabinet.

Private retailing is a key part of Gucci's turnaround strategy

Gucci opened its first private store in April 2022 in Los Angeles’ Melrose area. Accessible only by appointment, the ‘Salons’ exclusively show the most elevated products, including made-to-order collections. Privacy is key here: windows are tinted so clients can see out, but passers-by can’t see in. Private appointments are flexible and can be booked for 2, 3 or 4 hours, or all day, in which case a special menu is available from the Gucci Osteria restaurant on Rodeo Drive. The store has been designed to be flexible and host special events: the racks can be easily removed to use the store as a fine jewellery or watch salon, for example. Nine private stores are set to open in the coming months (New York, Paris, Milan, London, Dubai, Hong Kong, Shanghai, Taipei and Tokyo). They will support Gucci’s turnaround strategy and product elevation, with its average selling price rising double-digits last year.

Tiffany’s The Landmark has to both accommodate 2 million visitors per year and top VICs 

Tiffany’s Fifth Avenue store is a cultural destination and New York City’s fifth-largest tourist attraction. Now fully renovated, ‘The Landmark’ (as LVMH dubbed it) will probably be even more attractive than before, especially with tourism booming. The challenge will be to cater to the expected 2+ million visitors annually and to design remarkable shopping experiences for top-tier consumers under the same roof and at the same time. To that end, each floor is equipped with private salons, starting on the ground floor with consultation tables coming with panels to create private spaces. On the third floor (the Love & Engagement floor), 4 private shopping rooms are available for couples to have a more intimate shopping experience. The seventh floor (the high jewellery salon) offers spaces to reveal pieces specially curated for visiting clients. Finally, the 10th floor is a full VIP private selling salon only accessible to Tiffany’s top clients. It features 4 VIP salons and a private dining room that can host up to 60 people.

Confidential retailing: an efficient alternative to flagship stores to capture loyal customers

Intimate, more confidential – but not private – stores are also considered by luxury brands as a lucrative strategy to tie affluent loyal customers to their favourite brands knowing that they don’t necessarily want to shop in huge stores anymore.

Balenciaga’s couture store

In July 2022, before the media storm hit the brand and its artistic director, Balenciaga opened a ‘couture store’ located at 10 Avenue George V’s historic address, just below the brand’s couture salon. The store is not private per se but is dedicated to top customers, as it offers limited-edition high-price clothing and accessories (EUR 3,500 eyewear, EUR 8,500 to 15,000 bags and up to EUR 100,000 clothing that can be personalised by the ateliers upstairs). To refrain from random customers wandering around, the store is only accessible upon reservation on Saturdays, usually retail’s busiest day of the week. The store also serves as a “gateway to couture” as said by Balenciaga’s CEO Cédric Charbit: it’s a smart way to push the brand’s top clients to upgrade their spending and buy couture.

Thom Browne’s resolute alternative to a flagship store in Paris

When Thom Browne opened its first retail store in France in 2022, it was surprisingly not in Paris, as one would have expected. Rather, the brand opened a small 50 square-meter store in Saint-Tropez inside the member-only beach club Épi. The US label, whose ambition is to become a global brand, obviously cannot afford big flagship store locations yet. The idea here was not to cater to as many random customers as possible, but rather to develop close relationships with a few top ones. In that sense, the new outpost acts more as a clubhouse than as a billboard. Overall, the new Thom Browne stores are the opposite of the usual ‘mega-store’ that luxury big names are investing in or relaunching. On the contrary, they are on average less than 150 square meters and in locations that are more interesting than visible.

It’s no surprise SKP was the first to dedicate a floor to private luxury brand stores as the department store accounts for the highest sales in China. Besides, Asia is the continent where most of the future growth in luxury consumption lies (despite recent worries in China). Asian customers are also more eager to participate in exclusive and entertaining shopping experiences.

If Chinese VVICs will probably favour shopping at the most exclusive freestanding flagship stores when they are back in Europe or in the Americas, VICs and other big spenders are still to be caught by department stores. Assuming these consumers will revenge-shop when they resume travelling, department stores should consider opening private luxury brand shop-in-shops to make sure they will cater to these tourists’ demands. The surface allocated to such new stores could be made profitable thanks to higher average baskets. Even though questions remain on the business agreement to negotiate with brands, the initiative could be an additional tactic for department stores to retain luxury brands at a time when they are increasing their DTC operations.

Another option is to double down efforts on personal shoppers, private lounges and extend the services and experiences offered. This is what Harrods will do in 2023 as mentioned by CEO Michael Ward during the NRF big show in January 2023. He is planning to multiply fourfold the resources allocated to private shopping (people and systems) while focusing on managing relationships with luxury brands and making sure that Harrods will be able to satisfy the demand for luxury products.

Credits: IADS (Christine Montard)

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The IADS’ role as an expert platform is to be aware, explore, and inform its department store members about every aspect of innovation in retail, in order to help them address the future challenges with the best cards in hand. This involves taking a step back from fads and fashion, and addressing innovation with a cold head to report what is going on.

This is the reason why the IADS invited Sandra Gasmi, founder of Demain Beauty, an innovative clean beauty brand, to present the Metaverse initiative she has developed with her team in partnership with Chafik Studio, an architect company founded by Chafik Gasmi, her husband, that has worked with Sephora, Lancôme, LVMH, in addition to having experiences in the hospitality sector.

Is the Metaverse still relevant in 2023?

While the Metaverse was such a hot topic in 2022, the hype has died down a bit as AI technologies steal the limelight. But this does not mean focusing on the Metaverse as an extension of a retailer’s brand is to be completely set aside. According to Coresight Research, retail spending on technology is expected to reach USD 229 billion in 2023, a slight increase from 2022. The Metaverse is still seen as a place for growth as an extension of the omnichannel offer.

While the Metaverse is still in its early stages, it represents new revenue channels and opportunities for retailers, which is why many of them are continuing to invest in it in 2023.  For instance, L’Oréal’s venture capital fund, BOLD, participated in a USD 4 million funding round for French metaverse developer Digital Village as the technology enables a 3D world for brands to engage with customers. Also, a retail survey conducted by retail solution company Avalara found that omnichannel investments are top of mind for retailers, and the metaverse is seen as a priority in strategies going forward.

The Metaverse, applied business case: Demain Beauty

In order to get a first-hand look at what retailers can do with the Metaverse, IADS welcomed Sandra Gasmi, CEO of Demain Beauty, and her architect husband Chafik Gasmi, founder of Chafik Studio to showcase a brand experience in the Metaverse which trains and informs employees and consumers about the various products offered and active ingredients through an immersive and interactive experience.

Chafik and Sandra Gasmi brought their two worlds together of brands and architecture to offer an immersive experience that can help people discover the brand in new and fun ways. The tools and experiences that were developed are meant to create brand engagement and brand loyalty, as well as increase the conversion rate because consumers will better understand the brand.

Using the Metaverse to educate

If a person sees and feels a product, they will remember 20% of what they have seen. But if they have the opportunity to interact with the information in the real world, they will memorize 75%. This is what the Demain Beauty Metaverse experience aims to do. Users are fully immersed in a world that requires their full attention allowing them to be fully focused on what they are doing and what is going on in their surroundings. The Demain Beauty Metaverse experience has incorporated gamification tools to boost the attention of the user even further so that as they learn they feel a sense of pleasure that positively impacts the learning experience. The tool can be imagined in two ways: as a retail animation tool and as a training tool.

The Demain Beauty Metaverse experience

Within the Demain Beauty Metaverse experience, customers start their journey in a lobby, from where they can shop and learn more about the products. They always have a shopping cart attached to their avatar in this space so that they can continuously increase their basket size when desired.

The lobby is in the centre of a circular structure that is suspended in the air. Around the circle, there are various galleries that have games the user can interact with. The games are focused on educating the consumer about pollutants, good and bad bacteria, and that Demain Beauty does not use single-use plastics as a way of respecting the oceans.

The Demain Beauty Metaverse experience is still in its early phase, but they hope to eventually have it online and, on an app. The total cost to build out the experience was EUR 200,000 and took 7 months to complete.

What makes the Metaverse attractive to retailers?

While Web2 brought on major advancements in communication tools and social media outlets, Web3 has the potential to augment these applications even further. First, the new technology has the capacity to treat larger amounts of data. Second, this data all belongs to you which gives you more control over how you are seen or how your experience is dictated.

The Metaverse allows a brand to use the architecture and the offer of their experience to attract users to their brand. The difference between physical selling space and the Metaverse offering is that in the Metaverse, you can be more creative, not only in the physical build-out of the experience, but the brand can also be infused through communication, education, and the shopping experience. While inventing digital and immersive experiences that are meant to wow consumers, it is still important to focus on elevating physical experiences as well.

With the Metaverse, the technology can be used to create a “digital twin” of the physical store, which is something that has already been done in the hospitality industry, and which allows one to see and model any planned changes in the retail space in advance. It also significantly creates more fluid interactions between development teams and can even be used by marketing and communication teams for planning and simulation purposes.

The Metaverse can seem like an unknown technology that can easily suck up corporate research and development funds, but brands that act early gain the advantage of understanding how it works, which will be crucial once trends develop further. Brands that have tested the Metaverse so far see the potential, but warn that controlling brand image in the Metaverse is not easy and there can be higher risks of IP and trademark infringement. This proves that the relationship between the virtual and physical worlds for a brand is very important and must be carried out with caution.

Conclusion: The Metaverse is an experience worth experimenting with

Bringing customers and employees from the physical world into the metaverse might raise some challenges, especially in the sense that there is a learning curve when using new technologies, especially those as radical as the metaverse. Customers crave experience, and experience is centred around the senses. These sensory experiences are not as easy to capture in a virtual world as there are some limitations as to what can be mimicked online.

But what the Metaverse can offer is an out-of-world experience, one that consumers can only imagine. This is a great way for retailers to experiment with new ways of showcasing their products and educating their customers in a more memorable way. While the Metaverse offers some limitations, if executed well, it can transport customers into an immersive thought-provoking experience that can build up the brand power of a retailer.

Credits: IADS

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The IADS is at a crossroads when it comes to helping its members, by at the same time addressing their most operational questions and coordinating the informational flow, but also helping them to address future challenges, by questioning their methodology and providing a different point of view.

This is the reason why the IADS invited Eugenie Rives to share her view on the management of innovation and transformation, as the Early Project Managing Director at  Project X, Alphabet’s “moonshot factory”. Before joining X, Eugenie led Operations for Google in France and Sub-Saharan Africa. Before Google, Eugenie worked for Alcatel in Mexico city, managing projects to connect cities and public infrastructure online.

Alphabet’s moonshot factory is the place where uncomfortably ambitious, world-changing ideas are developed. These early-stage moonshot teams are exploring radical new ways to solve some of the world’s biggest problems using breakthrough technology. She explained how a moonshot project works.

Introduction: Google Project X’s purpose

Google Project X was created 10 years ago by the Google founders, Larry Page and Sergey Brin, to develop the Google of the future. In that framework, Project X’s mission is to invent and launch “moonshot” technologies where world-changing ideas are developed to make the world a better place. Moonshot teams are exploring radical new ways to solve some of the world’s biggest problems that cannot be solved with conventional, incremental ways of thinking and behaving.

A moonshot is a project which sits at the intersection of the 3 following ingredients:

1. A huge problem affecting millions or billions of people,
2. A radical, sci-fi-sounding solution that may seem impossible today,
3. A technology breakthrough giving hope that the solution could be possible in the next 5-10 years.

Managing such projects requires a different thinking process as well as alternative management methods which could inspire retailers.

The “moonshot” factory: a few examples to understand Project X and its variety

Waymo, formerly Project X’s self-driving car project, is the perfect illustration of a “moonshot”. 1.4 million people dying each year in car accidents is a huge problem. LiDAR (machine learning and smart sensors emitting pulses of infrared light instead of radio waves) is a true breakthrough technology which will empower a radical solution: a self-driving car.

Tapestry is a “moonshot” for the electric grid that aims to speed the transition to a resilient, carbon-free electricity system. It develops new computational tools that will create a holistic and dynamic picture of the grid.

Intrinsic is a robotics software and AI “moonshot” working to unlock the creative and economic potential of industrial robotics for businesses, entrepreneurs and developers. The team is developing software tools designed to make industrial robots easier to use and more flexible so that more people can use them to make new products, businesses and services.

Using beams of light, Taara is working to bring high-speed, high-capacity and affordable internet access to the 4 billion unconnected and under-connected people around the world.

Tidal is developing new tools to protect the ocean while preserving its ability to support life and help feed humanity, sustainably. To that end, the team is working with ocean farmers to develop an underwater camera system and a set of machine perception tools.

How does Project X work?

Filtering ideas and building projects 

Teams at Google Project X don’t want to work respecting processes. As a result, there is only one process: filtering. Each potential “moonshot” starts with an idea. A rapid evaluation (a few weeks) of the very interest of the project is done and a small team is created to enter the project’s early stage phase (lasting a few months). If all goes well, it becomes an X project which will last several years. During that phase, the team evaluates the risks and possible applications of the project. The incubation phase lasts 1 to 2 years before ‘graduating’ to become a 100-people project.

There is an additional filter to decide which project to work on, considering there 2 types of projects:

•    The ones with 100% chance of helping 10 million people.

•    The others with 10% chance of helping 1 billion people: this is the kind of project Google Project X is focusing on.

Six principles relying on people and culture

Project X is a “moonshot” in and of itself. Its breakthrough idea isn’t technology: it’s the people, culture, values and practices that can make radical, purpose-driven creativity the path of least resistance. Breakthrough innovation happens when passionate teams of people have the audacity to challenge each other’s perspectives and aim for what seems impossible.

To that end, 6 work principles are applied at every step of the way. Some are counterintuitive to how projects are often managed in companies:

1. Aim for 10X, not 10%: the surprising truth is that it’s often easier to make something 10 times better than it is to make it 10% better. Applying this principle is also more exciting for people involved in the project and forces them to free themselves from existing assumptions, always questioning the status quo.
2. Work on the hardest things first, even if it can be seen as counterintuitive. If someone was asked to train a monkey to stand on a pedestal and recite Shakespeare, most people would start by building the pedestal, because it’s easier even though training the monkey is a crucial task. When taking “moonshots”, it’s almost always best to take on the hardest, most important part of the problem first, rather than waste time on relatively simple tasks that can be achieved later on. Working on the hardest thing first is basically the opposite of what companies usually do: look for the ‘low-hanging fruits’. At Project X, small wins are not considered fulfilling while overcoming significant challenges quickly is.
3. Make contact with the real world. The outside world will always teach things which cannot always be anticipated. The key is to get out and test in the field as early and often as possible. The real world quickly tells what doesn’t work and what can be improved.
4. Fall in love with the problem, not with the solution or not even with the technology. Technology is ‘just’ a tool, not the end game. The starting point for any new challenge should be to focus on the problem and seek to gain a deep understanding of it. That way, people can be more open to new approaches to find the best solution possible. This is a paradigm shift as people to run away from problems as fast as possible.
5. Build in diverse perspectives: innovation happens when creativity is fuelled by diverse teams, communities, cultures, and disciplines, challenging each other to spark even better ideas.
6. Embrace learning, not failure: people should be able to kill the project they are working on, hence killing their jobs. Society has conditioned us to see failure as shameful and best to be avoided at all costs. But taking “moonshots” isn’t possible without failing. So it is crucial to create a culture that makes it psychologically safe for people to fail and reframes each failure as an opportunity to learn. Celebrating such failures as much as successes and valuing each mistake for its lessons is the purpose of ‘Dia de Los Muertos’ events organized to celebrate the death of projects. It is also noted that failures are an intrinsic part of future innovations (what Google calls the “moonshot compost”: every innovation comes from an earlier project that had been stopped). In order to enable teams to be able to kill their projects in a reasonable manner, management is defining with them the bare minimum to be achieved and the no-return points, which are all reviewed at every management checkpoint.

What retail companies can learn: breaking predictability and a few rules

Sometimes counterintuitive, such principles can be interesting to companies in the midst of a transformation process. A lot of CEOs are coming to Project X to know more about the principles and how to apply them to their own teams. Innovation and transformation are not just a team’s problem, they are a company problem. Ikea is a fair example of a company transforming itself by hiring many talents coming from the tech world, bringing them together with the other teams, and empowering them with autonomy and trust. Executives should probably do it first, but the key idea is to have all employees on board to avoid a company working at 2 speeds: the ones innovating and the others. In that sense, CEOs are expected to lead by example as well as be ready to learn from “technical” people.

Innovation can be difficult to implement in companies where resources are limited. Project X’s point of view is that innovation should be a mindset. People and teams should innovate in their own jobs: this is not easy and requires a profound ability to change, but in the end, innovation doesn’t require that many resources.

Trying to break as many rules as possible, Google Project X asks employees to spend 20% of their time on any creative activities (from the doorman to the HR or the CFO). As a result, employees -not only do it- but come back to work with better ideas and feel empowered. It works, as Project X employees are eager to learn and want to make an impact. As a result, they truly use this time in stimulating activities.

When assembling a team, Project X makes sure each person’s background leads to a unique point of view or might mirror someone else’s. People who have wildly divergent paths can break each other’s routines and generate creative connections that aren't likely otherwise. People are encouraged to use ‘and’ instead of ‘but’: it encourages value and constructive feedback.

Finally, the performance management and the incentive scheme are quite different from the ones usually put in place in retail companies. Project X splits incentives as follows:

•    50% on ‘how’: team development, how people are helping others. Of course, it’s more difficult to manage as it’s more impalpable.

•    50% on the what, the result.

Conclusion: innovation is all about shifting perspectives

Being agile by shifting perspectives can be more powerful than being smart. Very often, people think that the answer to a difficult problem has to be complex or expensive. But simply looking at it from a different perspective could uncover simple and efficient answers: working on the hardest things first and spending more time understanding the problem rather than running away from it can make a difference.

As far as transformation is involved, whether it’s about digital or sustainability, it has to infuse the entire company and all the employees to bring actual innovation. Agility has become an important value and skill (even more since Covid): in its own way, Project X is an agile company, shifting paradigms to achieve true innovation.

Credits: IADS

What: A rather critical article about DTC business explaining why such brands should consider more and more in the future joining forces with department stores.

Why it is important: While it argues about CAC for these businesses, it does not take into account the most difficult part of the equation, i.e. the price structure of such brands, which, for now, prevents from making healthy and profitable partnerships in most cases.

The article discusses the shifting dynamics of Direct-to-Consumer (DTC) brands from a golden age in 2010-2020 to a slowdown by 2023.

Economic recession and high marketing costs have made consumers reluctant to discover and invest in new, often pricier DTC brands. Additionally, DTC brands have failed to create a perceived value, leading consumers to favor cheaper brands.

These challenges, combined with logistical hurdles and a preference for upfront bulk purchases or automatic reorders, have driven DTC brands, once aiming to disrupt traditional retail, to seek partnerships with established retailers.

This approach offers DTC brands benefits like credibility, consistency, and physical presence, making it a potential survival strategy in challenging economic conditions.

DTC changes course and comes to department stores 

What: Visa reports that US customers are increasingly concerned about the future, especially due to inflation and rising prices.

Why it is important:  The US boon for European retailers might not last much longer now that American customers start to feel the inflationary pinch. Their impatience to see Chinese customer is therefore growing.

In April, the Conference Board Consumer Confidence Index dropped to 101.3, with the future expectations component falling to 68.1, reflecting increased concerns over a potential recession and recent turmoil in the banking system.

The present situation component, however, increased by 2.2 points, indicating a strong view of current conditions. Consumers' median inflation expectations for the next 12 months remained elevated at 6.2%, but they expect prices to moderate.

Purchase intentions for homes, autos, major appliances, and vacations softened, suggesting that consumers may be cutting back in preparation for slower economic growth.

American consumers are increasingly pessimistic 

What: A study made by MIT Sloan on how to optimize work-from-home productivity for all employees.

Why it is important: Work from Home is here to stay, and there will no real back to normal in the foreseeable future especially in industries which are struggling to recruit.

The pandemic has led to a rise in hybrid work models, with 57% of marketing leaders working remotely some of the time and 39% doing so all the time. Hybrid work can reduce attrition rates and maintain productivity, but it can also weaken company culture and hinder younger employees' integration. Remote work is here to stay due to its cost-efficiency and ability to help companies scale. To build a thriving hybrid work culture, organizations should:

1. Develop new mentoring and coaching models
2. Establish virtual communities of practice
3. Build digital social bonding time
4. Identify in-person opportunities
5. Create space and time for informal digital connections
6. Encourage digital lingering
7. Harness digital tools to build and reinforce culture
8. Encourage overperformance of social cues
9. Ensure equity among remote, hybrid, and in-person employees
10. Challenge in-group/out-group thinking
11. Foster initiative-taking among team members

These strategies can help organizations adapt to the changing work environment and maintain a strong company culture while leveraging the benefits of hybrid work.

Managing the cultural pitfalls of Hybrid work 

What: In spite of the seemingly stable situation, Visa does not exclude a recession in Q4 in 2023.

Why it is important:  Impacts on consumption should be limited if this proved right, however this situation would not let room for additional crisis or issues as there would be no buffer to absorb them.

This Visa Business and Economic Insights report from May 2023 indicates a high likelihood of a mild economic recession starting in Q3 of 2023, based on leading indicators and their economic models. The downturn is expected to be initially triggered by a significant decline in business fixed investment (BFI), particularly in equipment purchases and less robust investments in structures and R&D, due to high interest rates and recent banking turmoil. Small businesses, heavily dependent on banks, are expected to face the largest investment reductions.

Consumer spending, impacted by high interest rates, is also projected to decrease; the report notes a shift from credit to debit card usage, indicating consumer caution. The GDP growth rate is anticipated to stay positive in Q2-2023, then decline at a 1.8% CAGR in Q3-2023, remaining largely flat in Q4 before recovery begins in 2024.

There are both upside and downside risks to this outlook. On the upside, the tight job market may prevent outright contraction and consumer spending may prove resilient, thanks to households' substantial excess savings. On the downside, persistent inflation could provoke further rate hikes by the Fed, potentially leading to tighter credit conditions and a deeper recession. A widespread global recession and the U.S. breaching its debt ceiling are also potential risks, both of which could significantly hamper U.S. economic growth.

Despite mixed signals, a mild recession in the US is still likely 

What: The Robin Report advocates for investments in existing loyalty programmes in times of recession.

Why it is important: While the suggested actions might seem obvious, they represent nevertheless a useful reminder of the basic steps that should be taken.

As the U.S. economy faces potential recession, retail CFOs are focusing on cost-cutting measures. However, this article suggests that investing in loyalty programs and member marketing could be a strategic move. During a recession, consumer behavior changes, with a tendency towards budget channels, deep discounts, and less loyalty. Therefore, traditional marketing models may not be as effective.

Loyalty programs can offer significant benefits. According to Accenture, 90% of retailers have some form of loyalty or subscription program, which often includes rewards, exclusive benefits, and personalized offers. These programs not only encourage customers to shop more and spend more, but they also provide a valuable source of consumer data.

During a recession, retailers without a loyalty program may find it expensive to implement one. However, for those with existing programs, several strategies can help maximize their effectiveness:

1. Reallocate resources into loyalty and ensure cross-functional alignment.
2. Revisit program rewards and benefits, focusing on saving money and lowering risk for customers.
3. Streamline the program to remove friction and increase sign-ups.
4. Increase the visibility and frequency of loyalty messaging across all channels.
5. Train store staff to provide excellent service and promote the loyalty program.
6. Set up experimental tests to understand what works and what doesn't.

By focusing on loyalty programs during a recession, retailers can preserve their most valuable asset - their customers. This proactive approach can help businesses emerge stronger on the other side of an economic downturn.

6 recession-proof ways to uplift loyalty 

What: An article explaining how design-thinking can help companies thrives even during recessions.

Why it is important: Since we live in a VUCA world, new approaches to problem solving are needed, often coming out of the box.

The article discusses the significance of design thinking and how it can help organizations navigate through challenging times. The authors argue that design should join finance, strategy, and talent on the CEO’s agenda, and they outline five main areas where design can be instrumental:

1. Preserve cash flow: When budget cuts are necessary, companies are advised not to pause all product design and development. Instead, they should prioritize one or two products based on user and business impact, and allow for new user-centric digital marketing. An example provided is a bank that switched from pushing products to educating consumers on finance, which increased sales by 25%.
2. Elevate scenario planning in strategy: In the face of uncertainty, design can complement the analytical approach to scenario planning. By integrating user-centric insights, a broader range of possibilities can be considered. A building materials and products company, for instance, identified three 15-year trends that could shift significant value across the construction value chain by using this method.
3. Manage supply chain risk: Design can help mitigate supply chain disruptions by redesigning products based on user needs, removing difficult-to-source parts, and accommodating a wider range of parts. An example given is an industrial-equipment manufacturer that removed an underused sensor and introduced a better-designed dipstick, leading to more accurate oil readings.
4. Build agility and resilience: Design can help organizations pivot quickly and effectively in response to changes in the market. This is achieved by integrating customer insights into the design process, building more flexible design capabilities, and fostering a culture of experimentation and learning. However, the specifics of this point were not fully covered in the text available.
5. Energize and care for the team: During periods of uncertainty, it's important to maintain a positive and engaging work environment to keep employee morale high. Design thinking can help here, but the specifics of this point were also not fully covered.

The article emphasizes that these unique approaches to problem-solving, driven by design, can provide significant value and boost an organization’s resilience, particularly during challenging times.

Designing out of difficult times 

What: A piece all about nostalgia for the American malls.

Why it is important: Department stores can not rely only on concessions and have a short-term approach on profits, if they want to have a different destiny. Their ability to curate and select should remain at the core of their model.

The shopping mall, once a symbol of freedom and a way of life in the 1980s, is in its twilight years. There were around 2,500 malls in America during their peak, but that number has dwindled to 700 today and is expected to drop to just 250 within a decade.

Factors such as the internet, recessions, social media, Covid-19, and computer games have contributed to this decline. The demise of once-iconic department stores has also played a role.

The shopping mall's downfall signifies the loss of a shared space for people to escape their screens, and the phenomenon of "dead malls" has become a subject of fascination for those seeking the remnants of a bygone era.

The glory days of the American Mall 

What:  Global travel is taking off again, however the destination mix is changing

Why it is important:  Some retailers might not be able to find back the pre-pandemic demand fueled by tourism.

The report indicates a solid demand for international travel for the peak season of June through August. International arrivals are expected to surpass 325 million for the first time since 2019, with growth in the mid-teens relative to the same period in 2022. Regions such as Asia Pacific, which were closed last year due to health regulations, have reopened. However, the report highlights that travelers may choose destinations with less restrictive entry requirements due to a growing backlog of unprocessed visa applications.

Through 2023, global travel has consistently risen, setting the stage for further gains during the summer season. Outbound travel from 63 out of the 113 countries monitored by the Visa International Travel Platform exceeded 2019 levels from January through April 2023. Compared to the previous year, this is a significant improvement where only 10 countries had reached this level of recovery. An additional 95 countries have achieved at least a 75% recovery rate, implying that most countries are nearing or have surpassed their 2019 levels.

However, the growth in global travel is being hindered by delays in issuing cross-border travel documents. Countries like Canada and the United States have been particularly affected by these delays, with applicants facing extended wait times. To overcome this challenge, some countries, such as Australia, have hired temporary staff to help clear backlogs.

The document-processing delays, while burdensome at the individual level, seem less impactful at a macro level. However, the visa backlog could have more long-term implications on foreign travel to the United States, especially with the growth of younger populations in countries where visas are required. These populations represent the next generation of outbound travel from key source markets. Due to visa complications, the emerging middle classes in countries like Brazil, India, and China might consider visiting other destinations that are more welcoming.

Travelers unable to obtain required entry credentials are turning to other destinations more open to their visits. The report indicates that Latin American and Caribbean travelers, who are currently subject to some of the longest visa processing delays, visited destinations that did not require visas in greater numbers in 2022. The example given is Cancun, which gained 100,000 more visitors from countries such as Colombia, Peru, Uruguay, Panama, Jamaica, and Costa Rica between 2019 and 2022. This was due to Mexico not requiring a visa for these countries, unlike the U.S., leading to Las Vegas losing a similar number of visitors.

May 23 Global Travel Insight 

What: A report by In:China Monitor explores the current situation of Chinese tourism by giving an overview of new trends and interests as well as a broader reflection on the actions and projects put in place by European countries and an overview of how promotion in China has changed.

Why it is important: The return of Chines tourists has been eagerly awaited as China had the largest demographic of international travelers pre-Covid, with 155 million tourists spending over USD 250 billion globally in 2019.

Section 01: Is this the return of The Chinese Traveler? 

Restrictions on overseas travel were dropped in January of this year. Prior to 202O, Chinese tourism was the largest demographic of international travelers, with 155 million tourists spending over USD 250 billion globally.

International flights will resume gradually between this year and 2025 per China’s “14th fiver-year—plan” for civil aviation. The first phase will focus on the local market and the second phase will be a period of growth which will be aimed at restoring the international market and improving levels of openness.

Chinese tourists have traveled to nearby destinations first such as Thailand and Indonesia as prices are high for international flights and there are long delays getting visas.

Within a half hour of the news that travel restrictions would be eased, searches for popular cross-border destinations increased tenfold. The most popular destinations were: Singapore, South Korea, Hong Kong, Japan, Thailand, Macau

From mid-January, Chinese outbound travel has returned to 62% of pre-pandemic levels with approximately 250,000 Chinese people traveling out of China on a daily basis and around 7.5 million outbound travelers per month. There was a 117.8% increase in the number of Chinese people traveling overseas

During Chinese New Year, domestic airlines and major hotel chains reported sold out bookings, with hotel sales revenue increasing by around 20% compared to 2022. About 308 million trips were made in China and domestic revenue increased by 30%, reaching EUR 53.3 billion. While these numbers reflect short haul travel consumption, this was representative of the pent up demand to return to travelling.

Chinese travellers preferred to stay within Asia during Chinese New Year, with Hong Kong and Macau being the top destinations followed by Thailand and Singapore.

The top approved destinations for Chinese travellers were Switzerland, Thailand, the Maldives, Russia, New Zealand, and Singapore.

It is predicted that the first important wave of Chinese outbound travelers will happen in July and August, with the peak being in autumn during the Golden Week getaway.

Section 02: The New Chinese Tourist: Intarget New Survey Results

Intarget conducted a survey of wealthy Chinese travel enthusiasts and belong to the the Global Web Index socio-economic quintiles 1 and 2. The findings include what they look like, how they decide where to go, what they expect, and how they usually buy.

China has the second largest number of ultra-rich, with more than 32,000 people holding wealth that exceeds USD 50 million. Wealthy Chinese tourists are the largest in the world and Chinese tourism is still the largest source of international travellers.

In the post-Covid era, new profiles have emerged. Wealthy Chinese travelers describe themselves as career-focused, creative, fashion-conscious, and health-conscious. Additionally, 70% believe that in the next 6 months the country’s economy, the environment, and personal financial resources will improve.

Wealthy outbound travelers are enthusiastic about technology and rely heavily on their phones for their travel needs. They are family-focused and balance their careers and family life, sharing their love for travel with their families

Resorts, spas, staycations, and winter sports are among the top preferred vacation types of wealthy Chinese travelers which could be attributed to a renewed focus on wellness and quality time with loved ones. They also prioritize destinations that offer relaxation, cultural experiences, easy travel logistics, and good facilities for children among others.

Wealthy Chinese travelers are savvy consumers that research online to inform their purchasing decisions. They are willing to pay a premium for high quality products and services and are loyal to the brands they trust. They spend time looking for deals and trust online reviews.

Personalization is a key factor in attracting and retaining wealthy Chinese travelers.  This demographic expects brands to cater to their specific preferences and needs. Brands should offer exclusive services and understand their customers’ individual tastes to gain their loyalty.

A growing preference for travelling in small groups of family and friends and personalized tours have also grown in popularity.

Section 03: How to meet Chinese Tourists’ Expectations? 

According to experts across the globe, there are several ways to meet the expectations of Chinese tourists.

It is important to plan online in advance as Chinese tourists prefer to use multi-functional social media platforms and Online Travel Agencies (OTAs) during the travel planning process.They tend to favor an application that integrates social networking functions.

Wealthy Chinese travellers rely on online research and trust online reviews of products and services, so it is important to have high-quality products and services and to have positive online reviews.

It is also important to use mobile-friendly content that is designed for mobile use and aesthetically pleasing, including infographics and virtual hosts in videos.

Section 04: Navigating Chinese Digital Platforms for Travel

Chinese tourists’ discovery phase happens online: they get inspired by Chinese influencers, look for ideas on Douyin and XiaoHongShu, and then use WeChat and online travel agencies to plan and organize their trips. When looking for information, they look for videos and photos.

Some applications they may use include Ctrip, Fliggy APP, Meituan APP, XiaoHongShu, and Douyin.

Section 05: Most loved by Chinese tourists: In:China Monitor’s selection of case studies 

Case studies performed by In:China Monitor show destinations that are most loved by Chinese tourists.

Croatia was chosen because of its campaign to target Chinese tourists during the Beijing Olympics and their new interest in winter sports.

The Swiss Tourist Board partnered with Alibaba to create a virtual reality tour which earned more than 1.25 million viewers.

Sweden leveraged Chinese social media by live streaming the Northern Lights on WeChat’s video platform to engage and entertain users who couldn’t travel to Sweden.

Section 06: Quick wins on how to re-engage with Chinese travellers

Solo travel is booming and expected to be an important aspect of the Chinese travel industry for the foreseeable future.

Travelers are looking for immersive experiences in unexpected destinations. The new Chinese traveler is no longer limited to the traditional mass tourism in organized groups, they are increasingly interested in seeking immersive, original, and unique experiences.

The trend for outdoor activities has also led to a new concept of leisure and travel which combines comfort and nature in an innovative way such as glamping.

Bleisure (business and leisure) and Bluxury are becoming increasingly relevant concepts in the travel industry as wealthy Chinese tourists shift towards more personalized and tailored experiences.

It is important to incorporate storytelling and localization when catering toward Chinese tourists. Connections between the destination and collective Chinese values and beliefs should be drawn to help establish a closer relationship.

Chinese travelers enjoy deal hunting and often are more concerned with prices rather than experiences. Cheaper add-ons, discounts, free gifts, and seasonal offers such as discounts during Chinese New Year can be attractive to Chinese tourists.

Accepting Chinese credit cards and mobile online payments and being informative about the tax-refund processes can make shopping more appealing to Chinese customers. Chinese-speaking staff as well as high-quality translations of content, and displaying QR codes with extra information can help incoming Chinese travelers feel more welcome and allow companies to effectively communicate. Providing free Wi-Fi is also suggest so tourists can share their experiences, photos, and videos with family and friends.

By providing excellent customer service, catering for their needs, and making them feel welcome companies can create long lasting bonds that will encourage Chinese tourists to recommend their travel destinations to friends and family. It is important to stay connected on social media to build a loyal customer base that could attract more Chinese tourists. Online word of mouth is high effective and a great way to attract new customers as well as boost reputation in the Chinese market.

May 23 Global Travel Insight 

What: WRC partnered with Deloitte to release a sustainability report exploring exclusive research into how retailers are driving sustainability using the latest cloud-based technologies.

Why it is important: Overall sustainability is crucial for retailers to remain competitive and thrive in the long term and provides practical insights and strategies for retailers to drive sustainability while protecting their bottom line.

Sustainability is becoming increasingly important to consumers; therefore retailers must prioritize sustainability initiatives to remain competitive. There are many ways that retailers can drive sustainability:

-    Reducing waste

-    Improving supply chain transparency

-    Promoting ethical manufacturing processes

Such areas can be enhanced even more by digital technologies, such as data analytics and automation, as they can help retailers identify areas for improvement and implement sustainable practices more efficiently. These tools also allow retailers to leverage customer data to personalize sustainability efforts and increase customer engagement.

Collaboration with suppliers, industry organizations, and other stakeholders is also key to driving sustainability across the entire supply chain. While sustainability initiatives may initially increase costs, they can also lead to long-term cost savings and improved revenue through increased customer loyalty and brand reputation.

Purposeful retail: How to drive sustainability in retail while protecting margin

What: The furniture industry has shifted from generational pieces that were handmade and handed down from generation to generation to ‘fast furniture’ pieces that can be easily bought then disposed of.

Why it is important: “Fast furniture’ contributes to the 9 million tons of furniture tossed in landfills every year. This is why recommerce has now expanded into the furniture space.

For the upper-end furniture market, there are several players acting as market intermediaries and resellers. They cater to luxury, high-design brands, and vintage or collectible furnishings. Among them, are resellers 1stDibs, The RealReal Recollection, Etsy, and Chairish. Like other marketplaces, these players offer a forum for third-party resellers, antique or estate dealers, and the like. They have avid, but niche followings and offer both buyers and sellers attractive highly shoppable websites.

Kaiyo is a furniture retailer that is disrupting the furniture recommerce space as its mission is to keep as much furniture out of landfills and in people’s homes as possible. The company offers an easy process for customers to sell their unwanted furniture, with an "instant offer" system and white glove pickup and delivery in certain areas. After receiving the furniture, Kaiyo inspects, cleans, and posts the items on their user-friendly marketplace. The company has seen significant growth as it offers a complete solution for selling, buying, and delivering pre-owned furniture.

Even Ikea has refocused on sustainability and launched various circularity initiatives. One of the programs is a buy-back and resale pilot that has expanded to many different cities after an initial successful pilot in Philadelphia. Their programs allow Ikea customers to sell their gently used items and receive payment in the form of an Ikea refund card. Ikea has also started selling ‘gently used’ items through its ‘As-is Online’ program.

From Ikea to Kaiyo, furniture recommerce resets the table

What: There’s still hype surrounding the metaverse, and although no one knows how things will shape out, the metaverse is still happening and experts believe that companies need to develop a strategy.

Why it is important: Currently, large enterprises such as NVIDIA and Unity are investing heavily to lay the foundational infrastructure of the metaverse, while Roblox, Decentraland, and Sandbox are jockeying to be the preferred portal, and Web3 studios such as Touchcast and TerraZero are working with leading brands to expand their market share.

Companies and governments have a window of opportunity to build and experiment in these virtual worlds that will unlock new possibilities previously thought unimaginable. Soon enough, most of us will find ourselves operating within virtual worlds, designing digital twins, and providing services in expansive Web3 environments.

Experts believe that now is the time to discover the metaverse to harness its power to drive deeper connections, more effective collaboration, and enhanced personal productivity and fulfilment.

The Metaverse is still happening 

What: A $1T has been spent over the last 5 years in digital commerce.

Why it is important:  While online penetration grows, retailer’s profits shrink, as the CAC and cost of serving customers is growing. This inefficiency in spending should be reversed for retailers to survive.

This Retail Viewpoint article discusses the challenges and potential solutions for digital-first retail.

The key points are:

1. Despite significant investment in digital commerce, retailers often see their profits shrink as online penetration grows. The cost of serving customers in a flexible and timely manner isn't balanced by sufficient topline growth.
2. Many retailers lack efficiency in their digital spend, leading to subpar results. There's a gap in the perception of digital capabilities between executives and line managers, indicating a need for better collaboration and alignment on digital strategies.
3. A lack of understanding of digital profit and the true costs and benefits of an omnichannel approach hampers decision-making. Only 48% of retail executives are measuring these elements accurately.
4. Retailers continue to increase digital spend without ensuring a positive return on investment (ROI). There's a tendency to prioritize short-term profits over long-term decisions, leading to recurring issues with digital efficiency.
5. The solution may lie in a digital-first retail (DFR) approach. Here, digital becomes the core of the business model, shifting focus from product to customer and conventional metrics to digital-first benchmarks.
6. DFR rests on four pillars:

o    Customer: Leveraging customer data to inform decisions and grow customer lifetime value.

o    Omnichannel journey: Creating a seamless, personalized experience across all platforms.

o    Product and promotion: Balancing the drive for online traffic and margin.

o    Network and fulfillment: Prioritizing free shipping over speed, and finding ways to reduce return rates and reverse logistics costs.

1. Implementing a digital-first operating model requires data-driven decision making, automation, and new KPIs that align with the digital-first focus.

In conclusion, if retailers don't adapt their business model towards a digital-first approach, they risk being part of the next wave of failed digital transformations.

Turning profit destruction into customer and shareholder value 

What: An assessment of 12 suppliers based on 28 criterion to help decisions-makers.

Why it is important:  53% of B2C marketing decision-makers plan to increase their spend on loyalty technology in 2023.

Forrester has conducted a research based on 28 criterion, in order to assess the pros and cons of 12 loyalty technology providers: Annex Cloud, Bond Brand Loyalty, Capillary Technologies, Comarch, Epsilon, Kobie, Mastercard, Merkle, Oracle, Punchh, Salesforce, and Tenerity. The report shows how each provider measures up and helps B2C marketing professionals select the right one for their needs.

When it comes to the three top contenders being Epsilon, Capillary Technologies, and Kobie:

1. Epsilon: Owned by the Publicis Groupe, Epsilon's loyalty solution is a part of their PeopleCloud platform. They focus on creating long-lasting emotional connections between brands and customers. Their platform is praised for its data management and preference management capabilities. They aim to optimize their platform further by focusing on AI and machine learning.
2. Capillary Technologies: Their offerings include a commerce solution, a customer data platform (CDP), and a loyalty platform. Their Loyalty+ platform stands out due to its robust functionality and AI-powered capabilities. They have plans to make tactical enhancements focusing on industry readiness, usability, and marketing planning.
3. Kobie: With a focus on driving both short-term customer engagement and long-term brand devotion, Kobie's vision is centered around building loyalty across the customer lifecycle. They offer strong services support and are planning to introduce more reward options and CDP integrations. Their platform excels in program structure and loyalty measurement capabilities.

When it comes to the strong performers in the realm of loyalty solution technologies, including Comarch, Oracle CrowdTwist, Tenerity, Salesforce, and Bond:

1. Comarch: After launching their SaaS loyalty offering, Comarch has invested significantly in platform improvements and its go-to-market strategy. Their focus is on community engagement, and their platform is known for advanced member profile management and fraud prevention. However, they lack strong metrics to track emotional loyalty and member engagement.
2. Oracle CrowdTwist: Oracle's loyalty platform, CrowdTwist, aims at delivering revenue-generating brand experiences. It has solid capabilities for setting up and managing loyalty programs and is known for loyalty marketing coordination and fraud management. However, it lacks flexibility in modularity and has limited self-service capabilities for clients.
3. Tenerity: Formerly known as cxLoyalty, Tenerity offers a modular approach that allows brands to purchase only the components they need. Their platform is adaptable and modern, with capabilities to manage and measure loyalty promotions, although they lack strong fraud management capabilities.
4. Salesforce: Salesforce launched a loyalty platform in early 2021 and focuses on helping marketers acquire and build lasting relationships with customers. Their platform is noted for its strong privacy capabilities, but it lags behind in rewards and benefits management and emotional loyalty measurement.
5. Bond: Bond provides a loyalty platform and services for North American brands, with plans to expand into EMEA. Their platform offers loyalty program management and optimization capabilities. However, their technology lags in scalability, and their vision and roadmap lack focus on some important areas.

Finally, when it comes to the contenders, Mastercard, Merkle, Annex Cloud, and Punchh :

1. Mastercard: Having acquired SessionM in 2019, Mastercard has improved its merchant loyalty capabilities. It offers sound data management and program optimization capabilities, particularly for brands operating in multiple geographies. However, it lags in areas such as content management, marketing coordination, and emotional loyalty measurement.
2. Merkle: As part of the dentsu agency network, Merkle offers a wide range of industry and marketing experience to its clients. Its LoyaltyPlus program provides robust member profiles and data management capabilities. Merkle excels in privacy thought leadership and emotional loyalty measurement, but it lacks proactive notifications of potential fraud and would benefit from an integration with a marketing resource management vendor.
3. Annex Cloud: Annex Cloud offers a Loyalty Experience Platform that provides solid program management and measurement capabilities. However, it is in a state of flux, rebuilding its strategy and product vision after a change in leadership. Although they've made a strategic hire in privacy, their capabilities in this area remain primarily compliance-focused.
4. Punchh: Acquired by restaurant tech company PAR in 2021, Punchh focuses on loyalty offerings for restaurants and quick-service restaurants (QSRs). Their platform serves the promotion-focused needs of these establishments and has strong loyalty marketing capabilities. However, it lags in areas such as member data management and experiential rewards support.

Forrester’s assessment of the top 12 loyaty tech solutions providers 

What: Coresight’s insights on ChatGPT and how to use it in retail.

Why it is important: The report suggests that everything needs to be built: several retailers are testing the tool and looking at where it could lead them, and Coresight advises others to see ChatGPT and its peers as a training field for now, but which needs to be explored urgently.

Coresight’s analysis shows that :

•    ChatGPT facilitates enhanced, automated content generation, with benefits for retail companies including increased productivity, improved personalization and marketing strategy testing and refinement. Many major brands and retailers—such as Coca-Cola, Carrefour, CVS and Kroger—are experimenting with ChatGPT to automate content generation, also enabling them to minimize labor and costs related to producing content.

•    Tech giants such as Alibaba, Baidu, Google, IBM and JD.com are launching ChatGPT alternatives to compete in the generative AI space. Brands should evaluate all options to identify which solution best suits their needs.

•    Platform vendors Google, Microsoft and Salesforce have taken an early lead in adding generative AI capabilities throughout their offerings to provide clients with improved customer service and enable brands and retailers to more easily integrate their enterprise systems, boosting business efficiency and productivity.

•    With its introduction making a splash, generative AI technology is in its early stages and continues to evolve rapidly, with the category benefiting from continuing healthy investment in AI generally

•    Brands and retailers should experiment with generative AI technology, but they must be cautious of the risks. There have been cases of inaccurate or misleading results, and several vendors are including a “human in the loop” to supervise and improve the output of generative AI models.

For Coresight, generative AI has huge growth potential in retail, as indicated by the rise of OpenAI’s ChatGPT and alternative platforms that can help brands, retailers and solution providers offer enhanced customer service and improve productivity. However, the technology requires human supervision at this early stage, rather than serving as a replacement for humans. They encourage business leaders to experiment with generative AI and explore its applications to realize business benefits while remaining aware of the risks of sharing their data. As the technology evolves, they expect to see even more sophisticated large language models and broader adoption across various industries.

ChatGPT and Generative AI: Five things retailers should know 

What: How to use design as an approach to fundamentally change the way products, services and organizations are developed.

Why it is important: In these times of needed differentiation, managing creativity in business requires new approaches, by addressing the why before the what.

Design thinking is a problem-solving approach that emphasizes empathy, experimentation, and iteration. It encourages people to consider the users' perspective when creating solutions. This user-centered design methodology is widely used in various fields including product design, service design, business strategy, and more.

The article explores how to create a design-driven company culture, but also explains the differences and specificities of Design to  Value (DTV), Design for Value and Growth (D4VG), design for sustainability, skinny design, and provides some real-world examples.

What is design thinking 

What: The cost to process $100 of returned merchandise is about $26.50 on average.

Why it is important: Returns are one of the biggest profit drains for online retailers. Fixing that has become a priority as inflation continues to crimp shoppers’ spending on everything from clothes to home décor.

Online retailers are making efforts to cut down return rates to increase profits as inflation continues to impact consumer spending. The shift to online shopping during the pandemic caused return rates to rise by about 14% in 2022 compared to 2019, largely due to customers buying multiple sizes of the same item for fit. Processing returns is expensive, costing on average $26.50 to handle $100 of returned merchandise, according to Narvar, a returns-management company.

Retailers are now attempting to reduce returns to save costs. Amazon shows items with high return rates to customers, while Dress the Population offers discounts to customers who promise not to return their purchases. Major retailers like Zara and H&M charge for mail-in returns, and 66% of retailers now charge for returns, up from 60% in the previous year.

However, a survey showed that 69% of consumers would stop shopping at retailers charging for returns, while 49% would pay more upfront for free returns. Retailers are also encouraging in-store returns and offering incentives for customers to keep unwanted goods. Some, like Dress the Population, offer significant discounts if customers agree to keep purchased items. This strategy has helped decrease the overall return rate by 7% and reduced the cost of returns by half for the company.

In addition to cutting down returns, retailers are also aiming to reduce customer acquisition costs, which have surged due to restrictions on online shopper tracking implemented by tech companies like Apple and Google. They are also trying to identify and manage heavy returners who account for a disproportionate amount of returns.

Retailers clamp down on returns 

What: Coresight explores the most recent metrics related to American malls in order to understand the forces at play and where they do.

Why it is important: While, just like department stores, they were predicted to disappear at the heyday of the pandemic, it seems that they are currently reinventing themselves as Coresight even sees them as a key tactical tool for brands in order to reduce CAC and boost sales.

According to data from ICSC (formerly the International Council of Shopping Centers), malls accounted for 12.2% of gross leasable brick-and-mortar area in 2022. Malls punch above their weight in terms of the channel’s share of total retail sales: ICSC estimates that 14.1% of US total retail sales went through malls in 2022, up from 13.7% in 2021.

This suggests that malls have higher sales productivity in terms of gross leasable area than other retail formats such as open-air shopping centers (which account for 55.8% of total retail gross leasable area but saw 38.6% of total retail sales flow through the channel in the fourth quarter of 2022, according to data from ICSC). High sales productivity is especially true at top-tier malls, which offer a more affluent customer base and are located in desirable areas for retailers to maintain their brand image while attracting foot traffic—generating higher sales.

Retail sales at malls totaled $728.9 billion in 2021 and $818.7 billion in 2022, according to ICSC—representing an 11.2% year-over-year increase. Occupancy rate is also higher in 2022 than in the previous years and tends to revert to 2019 levels, especially in top tier malls.

Coresight identifies a number of factors supporting growth for malls, and their forthcoming full report discusses these in detail:

•    A multichannel presence can produce a halo effect for brands, boosting sales and reducing customer acquisition costs. A number of brands and retailers report that establishing an offline presence supports online sales growth in new stores’ catchment areas.

•    Collective brand synergy in physical retail can increase sales. Brand synergy is the idea that brands generate more value by being in close proximity to other high-value or sought-after brands, which brands leverage to identify new locations that are likely to be successful.

•    Top-tier mall operators have the financial resources to continually reinvest in and renovate malls to meet evolving demand for high-quality experiences.

•    Malls can drive sales and improve the customer experience through investment in omnichannel. Mall owners’ investments in building out omnichannel capabilities can enable a more convenient shopping experience for consumers.

The state of American malls 

PRINTABLE VERSION HERE

Digital transformation remains a central topic of discussion for department stores. The IADS already dedicated its 2021 White Paper to the topic, trying to understand what was at stake and what was needed within department store companies to fully embrace the change. In order to bring a very down-to-earth angle to the conversation, the IADS invited Laurent Raoul to explain his views on digital transformation in heritage organisations in a new global context.

Laurent Raoul is the founder and managing consultant of XLc Consultancy Company, specializing in Supply Chain, Operating Models and Back Office IT systems dedicated to the Fashion Industry. He has run development or restructuring projects for brands belonging to main Fashion Groups in Europe or in the US, and for mass market and bridge brands or retailers.

Introduction: there is no such thing as “back to normal”

Retailers now live in a systemic world, which means that anything happening anywhere can have a worldwide impact. It is even estimated that a crisis is likely to happen every 12 to 18 months. As a result, retail operations are impacted by increasing chain reactions. ‘Heavy weather’ management becomes the norm, whether it’s to deal with natural disasters, financial crises, geopolitical uncertainties (if not wars) or the next pandemic.

In this troubled environment, past certainties fall short: it is no longer about being “big rather than small”, but about being “fast rather than slow”. Even though size will still matter, upcoming changes won’t be about the big companies eating the small ones, but about the fast companies overpowering the slow ones. To that end, they have to quickly change their methods in all aspects of the value chain and focus on raw data and back office operations, with extra attention put on IT management and knowledge.

Finance, planning, management, sales: it’s all about new agile methods

To manage companies’ transition and transformation, the most important words are resilience (obviously much-needed to mitigate crisis) and agility. While the word “agility” has become an overused blanket word, it still does mean something crucial for companies: the ability to go from situation A to B with both celerity (speed of transformation) and magnitude (depth of transformation).

The new finance: rolling budgets

In an unpredictable world, in which the coming year will probably not have much to do with the past year, is the usual yearly timeframe still important or even relevant for operative finance? Since Laurent Raoul discussed this matter with IADS member CEOs, the French newspaper Les Echos explained that the dogma of the budget completed at the end of the year to set the objectives for the following 4 quarters is over. Furthermore, it is increasingly considered that the usual budget management is becoming a growth inhibitor for companies.

Since Covid and even more so since the geopolitical and energy crisis, many companies have been calling for a more up-to-date and reliable forecast of their finances. Transforming management methods and tools is now a priority for many finance departments. Rolling budget tools develop as an answer: a few key indicators such as turnover, gross operating surplus, working capital requirements, etc… are updated each month or quarter. The method may vary as everyone has their own recipe and applies it totally or partially, generally keeping the annual budget exercise as a safety measure.

New ways of planning: the thinner, the more wrong

Should organisations better forecast or better react? As Eisenhower put it: “plans are useless, but planning is indispensable”. Nowadays in forecasting, it’s overall useless to go into details: the thinner and deeper they will go into details, the more wrong retailers will be. Still, forecasting remains very much relevant these days, but companies should not spend that much time and money on it in advance (no more planning quantities per SKU, store, and season) as situations are changing often and very quickly. Then a new concept emerges: “forcasgility”. It involves a better plan, better reactions and progressive engagement.

There are also 2 contradictory constraints to take into consideration, especially for finance teams. Procurement and production require early engagement to secure upstream supply, but distribution and retail increasingly engage as late as possible to better stick to sales. To tackle and anticipate the consequences of this contradiction, the supply chain should reverse. In short: we go from a front-to-back to a back-to-front system.

Velocity in transformation management

From a transformation perspective, unicorns’ work methods can inspire department store management teams. Such methods are making bureaucracy or heavy processes disappear from project and transformation management. New principles, work methods and tools should be promoted among teams.

The well-known ‘test & learn’ method is still relevant. Meetings should only be 4 people and never exceed 1 hour to ensure efficiency and decision-making. The ‘quick & dirty’ could even be used for some critical situations. KISS (Keep It Simple & Stupid), war rooms should also be considered. Also, POC (Proof of Concept), a demonstration of a product, service or solution in a sales context, could help show that the product can fulfil customer requirements and also provide a compelling business case for adoption.

Cross-channel operations 

The pre-tail (VICs, VIPs, influencers) is now a channel as much as a department store can be: B to C becomes a business in itself as B to B is. This means assortments and allocations have to be more precise and accurate than before, so working on arbitration is key. In that perspective, AI will be of some help to decide the most efficient product allocation, even more in case of product shortage.

Brands are also trying to build cross-category assortments, which is especially difficult as product categories work with different IT systems. Previously built in silos, operating models and IT systems tend to converge: it’s now visible in luxury brand collections with cross-category aesthetics, animations and market events, but also with seasonal and seasonless, short or long lifespan product cohabitation.

Raw data is the most important asset for the future

Back-office data for front operations

There are now countless CSR regulations to comply with. In France for instance, if retailers are not ready, fines will go up to €50,000. The level of information that should be provided will go up to tier 4 (at the animal level for wool for instance). The needed information for the front operations will come from the back-office supply chain data, using brands and retailers’ direct communication, partners, social media and apps, but also through governments and customs as well as coalitions and lobbies -up until the end consumers.

It’s a big change, as such information used to be kept in the back office. Strong agility and organisation in operations and IT will be required to bring data from back to front, in order to comply with the high number of rules and regulations. The fact that the product might be in licensing or sub-contracting won't make any difference when it comes to the data required. Of course, private labels will be considered the same way as national brands.

Regulation requirements and claims will be based on calculated KPIs such as the share of recycled and recyclable materials, main origin, etc… That is only the tip of the iceberg that we (consumers and retailers) see now. In fact, such information is rooted in the raw data: material scientific names, weight per unit, reference ID, batch ID, serial ID… All this data will have to be available, organized, and aggregated, to be available to consumers and regulators.

Which system for raw data?

From that perspective, an important question is to know in which system this raw data should be stored. For retailers, could it be in tier 1 and 2 internal applications such as their ERP? For brands, could it be in the internal applications such as PLM (Product Lifecycle Management) and the TMS (Transport Management System) for instance? Actually, none of them is able to aggregate all the countless information needed from the thread used in a piece of clothing to the garment’s overall carbon footprint. As third part upstream SaaS applications are already very much involved in retail companies, an aggregator is needed such as PIM (Product Information Management), data lakes or data hubs. It means the most critical information might be stored outside of the companies./nbsp]

Companies like Elementum (the provider of Apple, and considered as the potential successor to AWS) could become competitors for retailers and should be looked at. Elementum could lead the market upstream. In 2040, there might be a B2B equivalent to Uber, having no factory, and no physical business, but ruling all the business between brands and factories. Retailers could become a sort of taxi managed by Uber, with another company owning the most critical information needed to operate the business.

The importance of IT: people, knowledge and speed

A critical role in the digital transformation: the CIO

Companies are increasingly dependent on IT knowledge and IT teams. This is why the CIO position plays a pivotal and critical role in the transformation process. First of all, the CIO has to sit at the board and grasp what is going on. As a consequence, the CIO has to be a human being, which means he/she should be able to talk to the CEO and other stakeholders and make technical things clear to everyone. As a kind of teacher, he/she should give the appropriate wording and KPIs for the transformation project.

The KPIs assigned to the CIO should include speed, which is almost never taken into consideration, compared to cost or risk KPIs. The CIO also has to promote agile methods and avoid bureaucracy in IT: it is really toxic as IT sometimes ends up spending more time managing the process, rather than making sure the target is met.

In IT, the position and role given to consultants should be carefully considered. Even though they can help and provide important insights, consultants can be very dangerous if they manage architecture as it should be managed internally: it is too serious to be given to external companies.

The example of ERP implementation: speed and ‘state-of-the-art’, the double road map

A real-life case comes from companies looking for a new ERP system, like SAP, to transform their IT. SAP implementation is at least a 12 to 18 months project whereas speed is a key to success. But if speed is the only key, why would people work with SAP which is the slowest ERP? It might mean companies should pick the quicker solution rather than what is assumed to be the best one: it’s a paradigm shift.

In reality, retailers constantly need to adapt when it comes to digital transformation, which somehow forces them to invest in overpriced IT systems that they don't fully know how to use. It seems there is no alternative but there is an agile way to proceed with ERP implementation. Having a double road map works: this means running 2 projects at the same time. One team works in the short term with a first roadmap: it is not about being ‘quick & dirty’ here, or not even about quick wins, but it rather means quick solutions, first and second steps. In parallel, a second team is working on the medium and long term. Both teams are coordinated and discuss almost every day. The long-term team can use short-term quick solutions to help with the following steps of the project. Companies using this method have seen very good results.

Conclusion: agility in digital transformation is about speed

Laurent Raoul explained how digital transformation implies a paradigm shift in many ways. This shift involves new methods in all steps of the value chain: more flexible operative finance and planning, new management methods and cross-channel selling. At the time, the importance of data grows and is now necessary to front operations, only emphasizing the CIO’s critical role.

While agility has become an important value and skill (even more since Covid), speed is not taken into consideration enough when running digital transformation projects. Considering the inevitable crisis retailers and their teams will have to go through in the near future, and mandatory compliance with countless CSR regulations, speed might be the ultimate key to transforming a business and succeeding.

Credits: IADS (Christine Montard)