What: The report explores how digital shoppers’ relationship toward technology has shifted in light of the COVID-19 pandemic.

Why it is important: The report offers retailers and brands insight as to where they should make technological investments today and in the future.

The report is organized into five aspects of the retail shopping experience with the order mimicking the typical transaction flow: online discovery; online purchase; in-store shopping; payments; and delivery and collection:

Online discovery: Before the pandemic, e-commerce served a transactional role and stores remained the primary avenue for experiencing a brand or interacting with a product. Digital channels have proved that they have the potential to play a bigger role in the future shopping experience. Implementation of technology like AR and VR and content mediums like livestreaming have proven to enhance online experiences. Virtual experiences will become more commonplace in the post-pandemic era as businesses shift priorities to further develop virtual capabilities.

Online purchase: E-commerce is projected to account for 51% of the retail industry’s growth globally from 2020 to 2025. Customers that use digital channels to make purchases tend to purchase across a wider range of product and service categories. The digital shift will to a rise in dark stores, micro-fulfilment centers and automated delivery for those that offer online grocery services.

In-store shopping: Physical stores remain a critical part of the shopping journey, but their utilization and purpose need to be rethought. Euromonitor estimates that 76% of goods will still be bought in store in 2025. Implementing technology such as contactless checkout capabilities will enhance the overall physical in-store experience.

Payments: The crisis pushed the importance of contactless payment options such as card and mobile-based payments. Digital payments also grew due to the increase of e-commerce transactions. Digital wallets use online and in store settings play a big role in driving digital payments forward, and also help retailers overcome shopping cart abandonment.

Delivery & Collection: The reinvention of last-mile delivery and collection is expected to remain an important topic in the year ahead. Delivery and collection services have been expanding with options ranging from buy-online-pick-up-in-store (BOPIS), curbside pickup, drive-through, robotics, and drone deliveries.

The report concluded that the pandemic accelerated technology related investments and technology-related product launches. Digital transformations were accelerated by at least a year. It will be essential for retailers and brands to enhance their entire commerce lifecycle with technology from operational efficiencies to elevating the consumer experience.

Consumer Retail Tech June 2021

What:  In the US, retailers are under pressure to hire enough of the workers they need to recover from the pandemic

Why it is important: This phenomenon is not limited to the US and IADS members are anticipating these difficulties too.

Now that the US is opening back up, retailers rush to staff up stores and fulfilment centres, but this is not easy: in April, retailers only represented 10% of the net jobs created by US employers, and there are currently 965,000 positions open in retail, compared to 899,000 the months before.

Among the factors for explanation of such a situation, federal subsidies, insufficient childcare options, concerns over Covid-19 safety protocol and pandemic-induced introspections, are mentioned. The problem might be rooted deeper however, and more concerning for a career that is notoriously low-paying, demanding and with limited perspectives (for information, the average salary in retail in the US is USD 13.13 an hour, or USD 27.320 a year):

• Just like customers, staff favour loyal employers. The retail operators that were quick in laying off are now struggling to attract new talents,
• Employers need to rethink the compensation package: increase of the minimum wage, welcome bonuses…
• They also need to think on how to make the position attractive in terms of content, at a moment when omnichannel is redesigning the tasks and needed skills.

Retail’s Post-Covid Labour Shortage 

What: A “take-out menu” presenting new shopping experiences.

Why is it important: The article gathers new and/or noteworthy tools and technics to enhance omnichannel customer engagement and experience.

Seeking uniqueness

Octane AI is a personalization tool designed for Shopify players, equipped with features such as quizzes, which can help retailers learn more about each customer. There are several other models that are emerging, including THE YES, which offers 100% personalized fashion recommendations around your favourite brands every single day. The more you engage with the suggested items by choosing "YES" or "NO," the more relevant your feed will become.

In China, Taobao (owned by Alibaba) automatically generates a continuously enhanced interface for each user: product lists, livestreams, recommendations, etc. In contrast to the traditional search-based shopping, users consume this feed even when they have no intention of buying a product, as a form of entertainment in its own right. The psychological experience of the "bottomless bowl" reportedly tricks users into consuming up to 73% more than when the products are spread over several pages.

Boosting the online customer journey

As there has been a substantial increase in the usage of mobile devices, communicating via SMS can be effective, particularly since it enjoys a 98% open rate and has a 209% higher response rate when compared to phone, email, or Facebook. However, the effectiveness of this medium performs in combination with other channels such as emailing.

Fueling content marketing strategies

One good example is the Great Jones cookware brand. The company has strategically shifted from a destination to purchase pots and pans, to a content site. Apart from its strong social media presence, the brand has launched Potline a year ago, which is a direct SMS line that is non-automated, and provides real-time recipes via text messages. Here, the approach is relational before being transactional.

Convenient Personal Shoppers

Threads also offers a fully personalized luxury shopping experience via WhatsApp. This approach is to move from conversations to conversions. To justify this claim, the brand explains that 25% of their first thousand customers placed an order within four weeks.

Another example worth mentioning is Goody, which simplifies the process of sending a gift by streamlining it to texting. The brand has managed to seamlessly execute a digital unwrapping experience that makes the gift-giving process even more memorable.

Videos on steroids 

Combine livestreaming and e-commerce and you get live-shopping, enabling real-time interactions between buyers and sellers. It comes in interactive mode, and is dynamic, hyper-scenarized, and often broadcast in prime time. Stimulated by Covid-19, the process is omnipresent in China and increasingly widespread in the West.

Shop until you Drop

Drops are essentially a successful recipe that relies on exclusive products, limited access, a short time frame, powerful collaborations and, very often, gamified experiences. Among the most emblematic examples, is NTWRK, which combines drop curation and live events. This year, the brand launched Transfer, which is a two-day virtual festival combining online commerce and entertainment.

Online together

A few Shopify apps, such as Moonship and PowerBuy have emerged, which facilitate a group purchase experience. Furthermore, e-commerce is gradually incorporating several community aspects, such C2C chats: Howtank or TokyWoky offer chats that can be integrated on an e-commerce site, which enables consumers to direct questions towards other people browsing at the same time. Video co-browsing solutions - Surfly or Acquire - are becoming increasingly useful. In fact, with Hero, it is possible to follow the online journey of the consumers in real time.

Word-of-mouth

The Ibbü site allows specialists to share their expertise - for a fee - with consumers who need advice when shopping online. Similarly, The Expert allows users to book appointments for video consultations with interior designers or architects. Curated, allows you to shop with unbiased experts and get personalized advice on products. Several studies have demonstrated that ultimately, you spend more when you shop with friends.

Retailers making a serious play for gaming

Traditionally, brands used to launch in-game campaigns or enter into exclusive partnerships with popular games. Today, there is a big market for fashion brands as consumers are increasingly looking to dress-up their avatars. For example, Marc Jacobs, Valentino or the Gucci x Northface dressline on Pokemon GO. In parallel, we are also witnessing the rise of a new generation of games that fall under the “retail-by-design” category such as Drest, where players can act as stylists and create various looks on an avatar. Based on how your peers rate your creations, your score is determined and the associated rewards can be used to purchase virtual and IRL clothes from more than 160 brands - including Prada, Stella McCartney, Valentino and Gucci – which is enabled through a partnership with Farfetch. Several other apps work on a similar principle, including Attire or Covet.

E-commerce websites as channels for brand’s games

In China, this specific phenomenon is exploding. From 2018, almost all e-commerce platforms - including Taobao, Tmall, JD and Suning - have launched their own versions of mini-games. Once consumers begin playing the game and encounter the predetermined breakpoints, they can move to the next level only by performing certain engagement-based tasks. Another effective strategy involves enticing the player with rewards, particularly discounts, which are offered to encourage purchase.

Retailtainment a deep dive into the new shopping experiences 

What: BoF Case Study looks at Selfridges’ strategy as well as the challenges the department store currently faces to adapt its model to a radically changed fashion market.

Why is it important: Selfridges’ bet on experiential retail seems to have succeeded and translated into sales: revenues doubled to GBP 853 million (USD 1.2 billion) in 10 years before the Covid-19 pandemic hit, reflecting a CAGR of 7.5%.

A sharper luxury focus

It’s now clear that concession models can lower inventory risk and be more productive than wholesale. But importantly, Selfridges has interspersed its own wholesale buys as well as experiential elements, like a luxury florist or cinema. This, as well as the fact that concessions are placed in the middle of the store, and not simply lined up on the perimeter, makes shopping at Selfridges feel like a unique and engaging experience.

As Selfridges ramped up its focus on luxury it staged spectacular exhibitions to offer a more democratic posture than nearby Bond Street and rival Harrods. Selfridges’ open floor plan and broad range of price points across its wholesale buys and restaurants make a wider range of people comfortable wandering amid intimidating luxury brands. Selfridges has been able to invest large sums in shifting its stores upmarket partly because, rather than putting resources into expanding its network by adding new locations, Selfridges has stuck with just four stores.

At a time when luxury was becoming a more important part of its business, Selfridges kept up with high spending international clients’ demands for multilingual staff, foreign payment options and a comfortable lounge to provide services to tax-free shoppers.

Novelty and discovery

The company continued to invest in merchandising and marketing for its multibrand  departments, which it mobilised with store-wide thematic activations. The store also made space for its luxury tenants to stage buzzy pop-ups in sync with its themes, helping to stimulate clients with curation and discovery. In a general way, Selfridges managed to create appealing multibrand spaces offering an important counterweight to its concessions.

Selfridges has managed to use its wholesale buy to provide a sense of discovery for fashion-savvy consumers. For instance, rather than letting suiting and shirting dominate its menswear floor, a streetwear department with a fast-changing line-up of skater-approved brands surrounds a functioning skate bowl where visitors can reserve a slot.

In one of its boldest moves to promote discovery, in 2017 Selfridges reclaimed control of a prime space it had formerly leased to Louis Vuitton. The retailer turned the space into an ever-changing “Corner Shop” dedicated to housing special activations and accompanying capsule collections. Activations housed in the space have alternated between installations from contemporary artists or small designer labels, and pop-ups from major brands. This year’s “Good Nature” scheme maintains the focus on outdoors and the environment.

A social hub

For years, consumer interest has shifted from “stuff” to experiences like travel and dining, especially among Millennials for whom collecting memories to post online is as meaningful

as collecting goods. The main accessories hall in the Oxford Street flagship features a florist,

a champagne bar and a gallery for contemporary art. In the alley behind the store, Selfridges has installed a temporary SoulCycle gym. Next door, there’s a three-screen cinema.

The store’s food and beverage offering also plays a key role: Selfridges has allocated about 10% of the floor space in its Oxford Street flagship to fixed “social spaces” and Oxford Street store has 15 permanent bars and restaurants. The square footage dedicated to experiences is rarely as profitable as a luxury brand concession. But Selfridges looks at the productivity of the store in its entirety, the space given to restaurants and experiences having a halo effect on the entire store.

From internationals to locals 

The retailer’s ability to rebound in 2021 will depend significantly on how much it can pivot to

getting local clients to spend after years of investing in its international business. During Selfridges’ “Project Earth” scheme last year, a focus on nature and sustainability appealed to local clients’ growing interest in outdoor sports and activities, as well as reaching shoppers

who are increasingly concerned about fashion’s environmental impact and labour practices. During the scheme, the store launched a programme for buying and reselling second-hand fashion as well as a rental service.

Its latest activation, “Garden Centre,” features actual plants, gardening supplies and a resident gardener available in-store (and via video chat) to advise clients, as well as gardening-inspired pieces from Ganni and Prada. But perhaps the most symbolic pivot from international shoppers to locals is Selfridges’ recent transformation of its large VAT-refund lounge into a wedding venue to capture the boom in marriage celebrations after a year of pandemic delays.

Expand digital selection and services

In the years leading up to the pandemic, even the most spectacular physical retailers were already under pressure to offer more information and services online as consumption habits

shifted. E-commerce has been a challenge for luxury department stores like Selfridges as it’s hard to replicate their winning blend of luxury concessions and experiences online.

In 2010, Selfridges.com launched with the same buying team as the physical store, but with other key functions contracted to third parties. In 2019, as the company ramped up investment in its online experience, it moved its engineering and customer experience functions in-house, so that they could work more closely with its creative and

merchandising teams. Rather than trying to become an e-commerce giant in its own right, Selfridges has focused on using e-commerce as a way to round out its menu of services for clients, and aims to be an online expression of the in-store experience.

Despite having never been a “digital first” company, Selfridges has managed to accelerate upgrades to its digital presence lately. More and more of the store’s luxury tenants have agreed to integrate their stocks with Selfridges.com.

While Selfridges still has a way to go to get its full selection online, the number of SKUs available for sale on its site has grown. Online sales grew 47 percent in the year ending February 2021, Selfridges said. The share of Selfridges customers who shopped online more than doubled from 19 percent to 45 percent last year, and the company expects this to stick at 32 percent for 2021, even with stores open.

Can Selfridges Future Proof the Department Store

In the fifth annual edition of the Fashion Transparency Index, 250 of the world’s largest fashion brands and retailers were compared and ranked according to how much they disclose about their social and environmental policies, practices and impacts.

The average score for all 250 brands and retailers is 23% out of 250 possible points. H&M is the highest scoring brand this year at 73%, followed by C&A at 70%, Adidas and Reebok at 69%, Esprit at 64% and Marks & Spencer tied with Patagonia at 60%. Gucci is the highest scoring luxury brand at 48%, up from 40% in 2019.

The majority of brands and retailers lack transparency on social and environmental issues. However, many brands are taking steps towards greater transparency. 101 out of 250 brands (40%) are publishing their first tier manufacturers, up from 35% in 2019.

As  seen in previous editions, brands publish more about their policies than they do about the outcomes, results and progress they have made to address social and environmental issues in their business and supply chain.

Fashion Transparency Index

What:  A review of some initiatives in grocery based on members-only model

Why it is important:  This model allows to create a sense of belonging to a club, enticing customers to significantly increase their purchases.

With the expansion of its membership-driven hypermarket chain, Store X (read more here), Ali Baba paves the way for a new approach, taking its knowledge of members-only schemes to create a sense of exclusivity for its customers, who have to pay USD 40 a year to access the Store X stores.

In these hypermarkets, 40% of the offer (all categories) is sold under private labels, contributing to improving (in the case of Store X) the brand perception of the chain. The members-only scheme allows to address a specific, fast-growing segment of Chinese customers willing to pay more for better services and experience.

Inside Retail mentions that the members-only scheme for grocery stores is not new: Warehouse Club in Singapore opened in 2014, Move opened in 2019 in the US as well. Although the models are different (Warehouse Club focuses on bulk buys, value packs and exclusive brands, and Move on artisan suppliers), they all sell groceries on a members-only model (we also reported other models in our IADS Exclusive here).

Are members only supermarkets the future of retail

What: The rise of local bookshops in the face of giant Amazon.

Why it is important: The story stands as a metaphor for omnichannel department stores which should choose the path of convenience and human local service rather than faceless efficiency.

The story of how James Daunt went from founding his own independent bookshop in London to becoming the saviour of the large Waterstones chain against which he had been competing. And now finds himself in charge of Barnes & Noble in the US trying to do the same in the face of behemoth Amazon.

The Englishman trying to save American bookstores from Amazon

What: A survey conducted of 2,000 UK and German consumers in April 2020 capturing their sentiment towards sustainability during the COVID crisis.

Why it is important: Brands need to recognize that consumers are becoming more conscious of their purchasing impacts, and this is being reflected in what they buy.

Research by McKinsey & Company showed that of the 2,000 consumers they surveyed, 57% have made significant changes to their lifestyles to reduce their environmental impact. Additionally, 67% consider the use of sustainable materials to be a critical purchasing factor, and 63% take into account a brand’s promotion of sustainability, making it evident that brands need to recognize that consumers are making a conscious decision to purchase from sustainable fashion players.

Survey: Consumer sentiment on sustainability in fashion 

What: The Financial Times questions the role of department stores in cities, now that their model seems capitalistically unsustainable

Why it is important:  The situation in the UK, similar to the US, is quite different from the rest of the world, in terms of retail presence per capita. The adjustment move at force on the market is specific in terms of intensity compared to other countries and companies.

After the total closure in the UK of Debenhams (124 stores), the shutdown of 58 John Lewis stores (even though it is the most financially conservative of all UK chains), Jenners in Edinburgh or Rackhams in Birmingham, the question of this format’s relevance is raised, especially when it comes to their relationship with the urban structure.

The FT speculates that, for this retail category, the most prestigious ones will survive, thanks to their destination status, as shown by the recent Selfridges’ unsolicited purchase offer. However, smaller ones or former regional gems will have to be converted; such as Jenners (hotel), Rackhams (mixed use). However, this has a cost which might be a deterrent, explaining why some chains choose to operate until the end rather than questioning in depth their model.

The former CEO of Beales, which collapsed in early 2020, thinks that the department store model still has a role provided it reinvents itself significantly: not more than 3,000 sqm, mainly in concession to be capitalistically sustainable, and with a lower footprint than in the past. The models with 150 stores as Debenhams used to have is gone, according to him.

The UK has been especially affected by both the Brexit and the Covid-19 pandemic, which put a significant strain on a market which was already overcrowded in terms of  retail presence per capita.

Town centre ‘anchor’ department stores cut adrift in pandemic

What:  TikTok is experimenting with new e-commerce services in order to monetize viral content for fashion brands to be able to take advantage of the app's 1 billion monthly active users, which are mostly Gen Z.

Why it is important:   Tiktok’s new fashion strategy is to explore additional features similar to Instagram and Facebook, including self-service advertising as well as similar links that influencers may take advantage on promoting products, and in app brand catalogues.

The new features will allow followers to know where to shop easily, and even make brand collaborations more successful. Thanks to the new opportunities TikTok will offer, fashion brands can better integrate their products in one place. It provides an app, in a way that’s easily accessible for the consumer, especially if it is a fashion-focused video showing multiple looks.

TikTok e-commerce is coming for hyper-engaged Gen Z 

What: Vogue Business Index is a global index covering 13 markets, 60 top luxury fashion brands and gathering 27,000 responses from Vogue and GQ readers spending more than USD 2,500 on luxury annually.

Why is it important: The Vogue Business Index could be a useful tool when it comes to evaluate brand potential. It also highlights several facts: maintain investments in e-commerce even if in-store shopping is returning, develop TikTok as part of the digital strategy and keep in mind that labour rights in the supply chain are as important as sustainability to consumers.

Vogue Business Index

What: Consumers and experts are having a hard time understanding which brands are meeting higher ethical standards as greenwashing remains an industry-wide concern.

Why it is important: Access to information has driven better decisions and created markets for more sustainable products.

Brands have been guilty of using sustainability popularity as a way to market their products, even if the messages are fabricated. Brands market sustainability as a false binary labeling products as okay to purchase or not, but the industry is a lot more complicated than that. Being sustainable is more of a spectrum with each product having a unique footprint.

The Fashion Revolution’s Transparency Index Multiple ranked Kering and Adidas as brands leading the way with their clear and accurate reports. Transparency is very important, so much that we might start seeing factory and textile information next to products when shopping online with an estimate of a product’s overall impact.

The flawed ways brands talk about sustainability 

What:  Generation Z is the youngest audience that current brands are targeting, analyzing, and adjusting their strategies accordingly to.

Why it is important: Gen Z shoppers build relationships with brands, showing their expectations are different than any other customer persona that the brand owners and retail stores have experienced before.

Generation Zers were born and grew up in an age of rapid changes so their knowledge about data and how algorithms work on targeted campaigns makes them even harder target to catch.

They're attempting to figure out what makes the company tick, rather than just looking at the products. They want to know the company’s goal, mission, and impact on society.

Meet Generation Z Shaping the future of shopping 

What:  Apps remain relevant for retailers wishing to personalize their relationship with their customers

Why it is important:  A decade ago, apps were a goal: build an app, promote it and customers will come and use it. Today, things are quite different: the app, just like the store, the website or social media channels, becomes integrated into the digital ecosystem and needs to take into all its components to make sense. This might be costly in terms of technology upgrade, but worth it: 2 customers out of 3 use branded apps for their purchases.

Apps, even in this era of new channels proliferation, still represent according to McKinsey the main channel for 2 customers out of 3 to buy from a brand. Apps allow to have a digital direct line with customers, data-rich, personalised and brand-specific.

However, the article argues that building an app is not the toughest job: the most difficult is to figure out its positioning in the customer journey and properly articulate it as a part of a broader brand and digital strategy, and not an endpoint like it used to be a decade ago. For instance, apps need to integrate live-streaming and social commerce options to be relevant in 2021, and represent one of the many entry door to the brand and retailer ecosystem.

To achieve this, retailers might have to overcome legacy issues in their tech stack, and not rely on the app to be a magical wand allowing them to become connected with the customer.

Yes retailers need an app, but also a strategy

What: The benefits of buy online pick up in store

Why it is important: The buy online pick up in store service confers some very real advantages to omnichannel retailers

Based on large surveys, the authors detail some of the benefits enjoyed by retailers offering buy online pick up in store service. Post pandemic, they argue that the Buy Online, Pick Up In-Store model may be the best option, as it provides many of the advantages of online shopping without many of the downsides of other types of digital shopping experiences.

“Buy Online, Pick Up In-Store” Gives Retailers an Edge

What:  Gen Z is the youngest generation born in 1995 or later, the way they build relationships with brands, and their shopping habits are different than any other generation that brands have had experienced before.

Why it is important:  Gen Z have grown up in a digital world where the lines between their physical and virtual lives have blurred, so in order to keep Gen Z’s attention and their loyalty, brands must learn to embed themselves in the lives of Gen Z.

Gen Zers differ from previous generations in how they expect experiences to be delivered. They want:

• Consistent delivery of retail essentials. Gen Zers expect accurate inventory information, good value for their money and a wide assortment of choices when shopping.
• Technology that provides value and convenience. Gen Zers appreciate innovation, but only if it can remove tension and empower them to engage with the brand on their terms.
• Individualized shopping experiences. Gen Zers want direct value that is tailored to them individually and the ability to co-create an experience that is uniquely their own.

Some companies’ social media apps are evolving into digital lifestyle platforms. Furthermore, investing in technologies that can deliver the fundamentals Gen Zers expect such as using robotics and AI to remove tension offer independent services, fix issues, and implement speedy resolutions.

Retailers should enable the store to be more intelligent and analyze consumer shopping behaviors to provide unique promotions and offers. Sensory devices that broaden the mobile and digital experiences can be added for convenience. Unique experiences should make customers want to come back for more.

What do Gen Z shoppers really want

What:  According to McKinsey, global growth will be driven by Asian customers in the future

Why it is important:  Brands and retailers need to adapt as “Asia” is a concept covering deeply different cultures and attitudes towards consumption.

Asia, already the world’s consumption growth engine, will reinforce that position over the next decade (50% of the global growth 2020 – 2030, for USD 9.5 trillion), forcing businesses and investors to learn how to serve distinct styles of consumers (Japanese Instagrannies, Indonesian Gen Z gamers, Indian small shop owners, Chinese lifestyle-indulging millennials, among others). It is expected that one of two upper-middle-income and above household to be located in Asia, and one of every two transactions to be made in the region.

There are of course challenges that the region will have to face:

• Growing inequalities, due both to a rapid growth and the impact of the Covid-19 pandemic for the most fragile populations,
• Climate disruptions as Asia is on the front line of climate risk (two-thirds  of the global risks are located in the region).

However, other elements tend to lead to retail optimism:

• Single-person houselholds are growing quicky and make up 15% in China, creating opportunities for the “lonely economy” retailers (home delivery, single-packaged food, pets, self-care…),
• Seniors are expected to account for a third of consumption growth in Asia, and are increasingly going digital (90% of Japanese and South Korean seniors are expected to be online by 2030).
• Digital natives (born between 1980 and 2012) including Gne Z and millennials, will drive Asia’s growth in the coming decade. The use of buy now pay later and other new gen credit options will fuel the growth, but will also be a potential time bomb in the region.
• Women are increasingly empowered and could generate a fifth of additional consumption in Asia.

These new consumption patterns and sources of opportunities will favour forces which are already quite strong in the region: hunger for sustainability, passion for Asian brands, digital transformation (including ‘super apps’) and personalisation (the segment of one).

the consumers in asia trailblazing new paths to growth

What: IADS’ Partner GDR quarterly report on innovation in retail.

Why it is important: A series of retail examples gathered by GDR from all segments and categories.

GDR identifies 8 trends this quarter: Meta-vending, Phygital Playgrounds, The Public Store, memory-making factories, the permanent pop-up, digital worlds, Eco chamber shopping and single minded ethos. We have made a selection of interesting cases from a retailer’s point of view below:

Meta-vending: how smart machines can bring a significant upgrade to stores by bridging online and physical shopping. It is for now mostly dedicated to convenience grocery shopping (as illustrated with Urbx market) or consumer goods (Huawei, Hyundai). But it can also provide interesting additional services to customers, such as Delipop, which is an automated click and collect concept in city centres, or Robomart which brings to the customer a selection of products they might be interested in.

Phygital Playgrounds: how omnichannel retailers are using their stores as an extension to their digital experience. It can be done so through:

• Apps: Zara with a store mode allowing to browse stores’ inventory from the app, Alibaba’s physical supermarket Freshippo Store X accessible with an app, Van’s allowing customers to customize their store experience thanks to Wechat,
• New services: H&M’s Weekday brand offers an instore pickup of online orders within 3 hours, Sam’s club allows customers to scan a large item (furniture, etc..) from the sales floor and organise the shipment just with their phone, SK-II providing interesting content and entertainment to customers waiting in lines.

The Public Store : transform flagships into public spaces where it is natural to gather. Many examples are given:

• Ikea has a store meddling into Copenhagen city by connecting different parts of the city (a bit like BHV Marais in Paris), Chinese children fashion brand Balabala doing the same in Foshan, connecting a street to a park,
• Gucci flagship in Seoul completely customized with Korean elements of decoration,
• Duoyun, a library in China transformed in meeting point,
• Georgian bank TBC opening flex offices,
• Anya Hindmarch opening a village of 5 stores in the same street,
• Dicks Sporting Goods in New York which offers a running trail, a climbing wall and a golf simulator in the store to test products.

Memory-making : incredible experiences in incredible flagships: new Lego flagship in NY designed to be half shopping, half entertainment experience, L’Oréal store in Shanghai connected in real time to Paris, Google store in NY, Experimental Perfume Club proposing fragrance education, Freitag in Bangkok which is half store, half factory, or proposing a cycle-powered cinema experience in Amsterdam, War Paint in London where male customers can have customized foundation made to measure.

The permanent pop-up: another way to animate flagship stores is to bring some elements from the popup playbook to bring novelty and surprise. GDR mentions Ralph Lauren with a café in its Tokyo Ginza boutique, Sotheby’s in NY selling pre-owned luxury goods, or Neighborhood Goods concept in itself. It also includes mall owners favouring popup initiatives to animate their property: a mall in Shanghai or Westfield in London do not charge anymore small brands coming in with an innovative popup concept.

Digital worlds: how brands can enrich their equity by being present also in the Metaverse.  Examples provided are less applicable to retailers, apart from the Gucci example, running at the same time an installation in Florence and in the Metaverse, and Metajuku, the first shopping mall in a virtual world.

Echo chambers: how to use curation and validation to increase the customer base.  This goes through a heavy use of social media (Hollister releases a monthly drop on Tiktok, Netflix sells private labels on its platform, fashion multibrand retailer The Yes using a Tinder-like app) but it also goes through content (grocery ecommerce website built around recipes rather than ingredients, Camps creating content for kids.

A Single-minded ethos: how to embrace important social issues.  GDR cites among other LMVGH and its Nona Source sustainable initiative, Zara Beauty brand, Morrisons and Lidl providing for free sanitary products, H&M offering free suit hire for job interviews, Mattel offering a free recycling service for used toys.

If there are any examples you would like to deep dive in, let us know and we will liaise with GDR to know more.

Global Innovation Report 79

What: The mid-2021 WRC report

Why it is important: A series of reports by countries allowing to understand the variety of situations for each of them, leading the WRC to launch a series of new initiatives to co-build a “new retail”.

This WRC issue is important as it deals with many different realities from country to country, given the variety of situations with the Covid-19 pandemic.

This is the reason why the WRC announces a “roadmap to rebuild a better retail”, a series of operations, meetings and gatherings that will span over the next 12 months, with a focus on 6 pillars: the planet, the society, the economy, the business, the consumer and the plan for change.

WRC also pays tribute to the late Galen Weston, owner of Selfridges, who sadly passed away last April 2021.

WRC ISSUE

What: Amazon does not know what it sells. It is a web service company.

Why it is important: This gives other “real” retailers a significant advantage in their relation with customers deriving from product knowledge

Starting from some of the surprising recommendations made by Amazon, Ben Evans looks into the nature of the business and concludes that Amazon does not, in any real sense, know what it sells. It knows a number, a size and a weight.

Product descriptions come from sellers. And in any case, the majority of items sold by Amazon are not sold by Amazon.

The important part of Amazon is its technology and its logistics. This is crucial for retailers to understand if they are to hold their own in the retail world.

Does Amazon know what it sell

What:  The study breaks down a range of approaches to target the next generation of shoppers.

Why it is important:  By 2030, Gen- Z will make up the largest consumer segment worldwide.

A new generation of customers is entering the market at a critical juncture for brands and merchants. BoF put some widely accepted attributes of Gen-Z under the microscope, and interrogates how five industry players — Nike, Brandy Melville, Morphe, Depop and Louis Vuitton — have successfully capitalised on the Gen-Z opportunity.

Young consumers lack strong brand loyalty and increasingly expect more from brands beyond their product offerings to compete among the plethora of options easily available across platforms and channels. Here are some strategies brands are deploying:

• Generate value through values such as taking part in social justice issues and world events through corporate activism. (Nike)
• “You start the sentence and invite them to finish it”. Make the community feel like they are part of the process and give them the opportunity to collaborate with the brand. (Brandy Melville)
• Recognize that Gen Z wants personalised messaging, style, and ethos that’s designed just for them . (Louis Vuitton)
• Create novelty without waste. Renew, Reuse, Recycle…  (Depop)
• Choose famous faces wisely. Gen Z is attracted to a new kind of star power. (Morphe)

GenZ Shopping Separating Myth from Reality

PRINTABLE VERSION HERE

Keeping markets under close watch, IADS collected innovative concepts such as unique transformative experiences presented by stores as shoppers demand physical connectivity and community following the isolation of the pandemic.

Check out how retailers are drawing customers back into stores through these unconventional experiences that can only be appreciated physically in stores.

![Retail Review # 4: Lacoste 

Lacoste, Los Angeles

Lacoste Melrose Place has launched the Lacoste Country Club, an elaborate retail offering with a shopping experience that provides a fresh take on country club vibes. The store will be reimagined every 6 weeks with new product assortments and varying themes.

MORE ON LACOSTE LOS ANGELES 

![Retail Review #4: Browns 

Browns, London

The London store offers four storeys of experiences with integrated augmented retail technology as an omnichannel unifier. The flagship includes a restaurant, courtyard, and a clubhouse that is only available to VIP customers where they can chat with their stylists at the bar. A pop-up space called “the focus room” allows specific brands to be showcased.

MORE ON BROWNS LONDON 

Camp, United States

The stores are staged to transform the space into universes such as campgrounds with activities that appeal to children and families. Some spaces are sponsored, allowing brands a chance to stand out from the rest. Regular events are held in-store and online to keep customers returning.

More on Camp United States 

![Retail Review #4: DFS 

DFS, China

DFS Hainan hopes to reproduce the wonders of the world in its new “The World in a Day” themed store. The concept is meant to allow Chinese customers unable to travel internationally to experience attractions based on Venice, Paris, Sydney, and Macao themes.

More on DFS China 

![Retail Review# 4 : snow peak 

Snow Peak, United States

The new Japanese-inspired hybrid store in Portland encompasses retail experience, a restaurant and the new headquarters all in one place. The concept features event spaces and an outdoor patio. The showroom displays products so customers can easily imagine their practical use.

more on snow peak united states 

![Retail Review #4 : Miele 

Miele, Australia

The German appliance manufacturer opened a new ‘Experience Centre’ near Melbourne that allows customers to host in-store dinner parties to test out the appliances. Customers also have access to the M Chef technology which uses sensors to cook almost anything to perfection. The concept mixes retail, DIY, and experience all in one.

more on miele australia 

PRINTABLE VERSION HERE

As retail is undergoing major evolutionary changes, so retail jobs are evolving. The possibilities of automation and the application of AI as well as social and political changes force a radical reassessment of retail functions and organisation structures to improve service and performance. At all levels, retail jobs are shifting, reskilling, being automated, or being deconstructed and redesigned for new retail models.

*What: Two trends are developing in the world of retail work: a shift away from store-based work (which is becoming increasingly skilled), towards technology mediated fulfilment work. At the same time, jobs are being reassessed and deconstructed as part of a search for a new retail productivity deal.

Why it is important: Both of these affect retail, and specifically omnichannel department stores,*

• as its store-based business shrinks relative to the online business
• as it struggles to find a new profitability model

The IADS has already written about “working from home”, “remote work” and “hybrid work” as it applies to retail during and after the covid pandemic. What is covered here is a longer-term adjustment in a broader economic cycle.

The future of labour

The world of work is changing. According to The Economist (see Labour Markets, The Economist), after four decades during which the rich world’s workers endured competition, technological change, unequal wages and unconvincing recoveries from recessions, while investors and companies benefited from expanding global markets, liberalised finance and low taxes, the balance is now shifting. The coming of a post-pandemic economy with lower unemployment will be characterised by a rise of the labour market thanks to two factors: a more favourable political environment; and a technology shift.

On the political front, the US is leading the way with infrastructure spending, the promotion of unionisation and higher wages. Thus, classically low-paid jobs such as those in fast-food and retail are under the spotlight. Unionisation is back in the headlines (see Amazon in Alabama FT article), McDonald’s is upping wages (see FT article), and Walmart is considering how to offer careers to its workers instead of the precarity of hourly pay (see article in IADS news).

This “paradigm shift” has been accelerated by the covid pandemic. Two elements for omni-channel retailing (including department stores) stand out:

The first is overall job losses. As traditional brick-and-mortar stores closed, so traditional sales associate jobs were lost. A study from the Centre for Retail Research showed that 177 000 jobs were lost in UK retail in 2020, and it is predicting another 200 000 to be lost in 2021. The job losses concern mostly entry-level positions such as sales assistants and check-out roles, while some jobs are being created in online warehouses and delivery.

The second is a shift in jobs. As retailers struggled to compensate for store losses through online sales, the relative number of order fulfilment-related jobs has increased.

![Retail Jobs table 1

Ben Evans, The Great Unbundling, January 2021

This is not a new process: The number of people identifying as retail associates on their LinkedIn profiles has declined 41.4% from 2013 to 2017 (see Retail Dive). Software developer is the fastest growing job in retail, with engineering and information technology jobs growing from 7% to 9%.

During covid, store staff have been taking on order and fulfilment roles either working in DCs or fulfilling from stores, providing click & collect service, kerbside pickup… Others have been providing one-to-one sales service over mobiles in “live streaming” shopping for customers.

Retail in the future will be in need of “upskilled” customer facing staff more akin to a concierge role on the one hand, and staff working with automation and AI on the growing fulfilment side of the business on the other.

Is it enough to “redesign work ecosystems”?

Unsurprisingly, consultants have caught on to this movement and have offered various perspectives.

• Thus, Oliver Wyman talks of “job redesign”. They have found that it has been possible to eliminate obsolete operating processes, some of which have resulted in productivity savings by up to 50 percent. They see the exercise as a periodic necessity in order to better align with the organisation’s future strategy; to ensure that work is easy to perform and productive; and that the work should be as engaging as possible for the individual.
• Deloitte on its side, describes managers caught between two realities: “One reality is that their workforce increasingly depends on external workers. The other reality is that their management practices, systems, and processes are designed for internal employees” (MIT Deloitte, 2021). This perspective challenges the linear career paths which have traditionally created value for companies and offers the idea of a “workforce ecosystem” including a broad community of workers and organisations.
• McKinsey addresses specifically the question of automation in retail and how we should be prepared for skilling and reskilling at scale, in particular as an alternative to replacing talent. They foresee that the remaining retail jobs will probably be better paid, with higher skills and lower turnover. “As retailers introduce additional automation into their retail models, they will end up with fewer but more highly skilled jobs. To get the right talent, retailers must invest in higher wages and benefits” (McKinsey, 2020).

Unbundling or deconstructing jobs

Against these approaches, however, it is argued that in times of uncertainty, another more radical argument is needed. This is connected to the tech concept of “unbundling” as described by Ben Evans (January 2021) and others. It describes originally a business process where a series of blocks or products inside a value chain are broken down to provide better value. What has happened to TV is an oft-quoted example with unbundling separating news, sports, storytelling, entertainment etc. into separate entities, in each one of which another company has grown such as Google, YouTube, ESPN, History Channel, Netflix.

That argument is taken further and applied to jobs and indeed the very notion of a job itself by John Boudreau and others (MIT Sloan, January 2021).  (See also Li’s Newsletter, Unbundling Work from Employment.) This approach argues that a “new operating system for work” is needed that will support a high degree of organisational agility amid increasingly rapid change and disruption. This new operating system allows leaders and workers to deconstruct jobs into more granular units such as tasks in order to deploy staff based on their skills and capabilities, rather than on their job descriptions.

The traditional work operating system was built for the Second Industrial Revolution, with work defined as “jobs” and workers defined as “job-holding employees”. The agile methodology is insufficient on its own to overcome resistance to collectively work on, and actively engage with challenges that span job titles or departments. In one example, staff could not understand how projects fit with their day jobs, how to find space to contribute, and how to respond to direct supervisors who felt that projects were unrelated to the employees’ functional areas.

This is not an argument for the deskilling and degradation of work as discussed by some analysts in the 1970s. It is rather a process of decomposing and eventual recomposing of skills due to economic and technological changes in order to make them better suited to the conditions of the time.

The process of deconstructing jobs into tasks also shines a light on the degree to which particular jobs can be automated depending on their nature. Thus, merchandise planning may be significantly automated, while supplier management only moderately so, and space planning might rest somewhere between the two. Most jobs can be placed somewhere along the three lines below:

![Retail jobs table 2

At the IADS, it has been clear that a number of department store functions have been “redesigned” or “redefined” or indeed simply been broken up. Thus, Globus divided its selling staff between sales associates and replenishment associates in order to allow the former to concentrate on customers and the latter to ensure merchandise availability. The same company followed a trend (which was adopted by others) consisting of separating the roles of buyers and planners, which it has since reversed. The marketing function over the last few years has become importantly divided into a brand role and a customer data role (exemplified by many including Galeries Lafayette).

As for automation, the HR department of Magasin du Nord has been investigating how jobs can be classified into more or less automatable parts. Falabella HR department on its side has already put in place some bots which effectively automate some of the more routine functions of the HR department itself and give a quicker and better service to employees.

The end of the retail job as we know it

What happens when the nature of retail changes?  The first thing to happen is that retail jobs change. If retail is changing today as profoundly as it changed with industrialisation, then the jobs designed to power that retail model need to be revisited. The current retail job model belongs to another age (see for example the Oxford University iLabour project).

Although many areas of retailing work can certainly still be managed within the traditional system, work is likely to evolve as retailing itself changes and as always it would be preferable to anticipate and control that change rather than bear it. The two trends outlined above will probably have dramatic effects on retail employment. Costs will shift, employment practices will change, and companies will need to adapt. However, it has often been argued that the increased productivity of businesses expected as a result of the application of new technologies has not happened. It is arguably unlikely to happen if the structure of employment does not shift to accommodate a new model and in so doing liberate the productive potential of new working models.

In addition, the shift in operating system described here will certainly necessitate different leadership skills to overcome problems of coordination, responsibility and consent. “This new agile, serial leadership will require leaders and managers to excel at human leadership as they perpetually reinvent work; construct more transient, deconstructed, and highly efficient teams; and blend humans with technology. (See Boudreau and Donner, MIT Sloan, 2021).

Unbundling is part of a process. After a period of turbulence, over time, it is often followed by “rebundling” in order to achieve the economic benefits which unbundled businesses cannot reach. Thus, the deconstruction of jobs into tasks may well be followed by a reconstruction of jobs on a very different basis. Unbundling in the music industry, for example, saw traditional giants suffer at the hands of Apple or Amazon which offered songs by the unit rather than control the whole value chain. However, while the customer gained in terms of price and choice, she lost out in terms of curation and direction. Then Spotify came along and in effect “rebundled” the music offer using customer data to personalise the offer. Some argue that the same process is happening in finance.

The question is whether the companies that get unbundled can ever be the ones that rebundle? Or is it always new entrants?

Credits: IADS (Dr. Christopher Knee)

What:  Visa estimates that for the first time, China will contribute less to the global recovery than in the past

Why it is important:  Global recovery will rely more on local answers (and customers) than in the past, and China might not bring all the answers to the table.

Since the 70’s, financial and trade integration worldwide lead to a synchronicity of effects during recessions and slowdowns. In the post-crisis recovery periods, China’s contribution has consistently increased. However, even though its share of global GDP has been rising in the past decades, its contribution to the recovery of the 2020-2021 crisis might be lower than in the past.

Visa explains that for this particular recovery process, the two reasons are that:

• China is now producing goods and services that are not necessarily consumed by the US and other advances economies (for instance, book demand has increased +23.9% from January 2020 to January 2021, and so did groceries, +13.5%, cleaning products, +12.5%, all categories that are not supplied by Chinese manufacturers),
• Regarding its five year plan, China is now focusing on its own internal market, focusing less on its past trading partners, leading to a lesser degree of support to the world’s recovery.

Visa estimates that, in the past, China contributed to 19% of the recovery in 2000-2001 (tech wreck), 33% in 2007-2008 (global financial crisis) and 32% in 2014-2015 (mid-cycle slowdown). It forecasts a contribution of 26% for the 2020 Covid-19 crisis.

China's changing role in the global economic recovery