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

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: Mental health services are being offered in national drugstore chains like CVS and Rite Aid.

Why it is important: Making mental health care available through retailers could reduce obstacles for those needing services.

CVS, the largest retail pharmacy in the United States, has added licensed clinical social workers trained in cognitive behavioral therapy to 13 locations in the Houston, Philadelphia, and Tampa metro areas since January. The providers will offer mental health assessments, referrals and counseling either in person or via telehealth.

The social workers are available during the day, and also on evenings and weekends in the company’s MinuteClinics, which provide a variety of nonemergency health care services either via walk-in or by appointment. The hours are more flexible than what therapists might normally offer, and the social workers partner with the clinic’s nurse practitioners and pharmacists to give prescriptions when needed.

CVS is not the only one investing in behavioral health treatment. Walmart has also announced its acquisition of MeMD, offering online medical and mental health care, which will be added to its Walmart Health services. Rite Aid is piloting teletherapy in the “virtual care rooms” of 13 stores in Idaho, New Hampshire, Pennsylvania and Virginia. And Walgreens is facilitating therapy appointments via the company’s web platform Walgreens Find Care, which connects customers to teletherapy from BetterHelp or Sanvello. Walgreens also offers free access to online mental health screenings.

In the past year, the number of people reporting symptoms of anxiety or depression nearly quadrupled. It is important to remove obstacles to mental heath care by making providers more accessible.

Pharmacies Are Entering the Mental Health Market 

What: Including the post-purchase experience in the evaluation of the customer journey

Why it is important: 95% of shoppers say that the handling of their returns affects their decision to purchase again. A first purchase does not guarantee a repeat one.

Retailtouchpoints proposes to examine 5 alternative KPIs which measure the way returns are handled:

• Purchase frequency before return vs. after return: 84% of customers are likely to shop with a retailer again if they are satisfied with the return experience. This indicator should therefore be helpful to measure up the efficiency of the process, and make sure that a portion of customer acquisition investments is not wasted on external factors such as a poor return process,
• Refund vs. Exchange: obviously, exchanges are better than refunds, therefore this indicator is key as it impacts profitability,
• Return rate and negative reviews: correlation might not be automatic, however, it might help to track customers who were not satisfied, left a review but did not care to return the product. How does this matter? Even though on the short run the profitability is not impacted, such customer might be lost on the long run.
• Percentage of calls regarding returns or refunds: a permanent tracker of return performances,
• Speed of returns: this is key in a customer-first strategy.

Five KPIs That Tell you Everything About Your Returns Customer Experience 

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

What:  Analysts are weighing the environmental impact of e-commerce compared to going to the store.

Why it is important:  So far, brick & mortar remains the most viable option, as shown by the unrealistic hypotheses taken in the “best case” scenario for e-commerce.

There are questions on the actual environmental impact of e-commerce and deliveries, compared to simply driving to the store. While Amazon claimed in 2019 to be more carbon efficient than going to the store, other studies show that the impact of online retail is double compared to brick & mortar.

A more recent study by Generation Investment Management aims at measuring this impact taking into account the latest technologies and improvement in the retail & logistical sectors. The study shows that, according to the hypotheses taken, e-commerce can represent either half of the emissions due to brick & mortar, or 3 times more.

It is telling that the best case for e-commerce taken into account in this study assumes that electric vehicles are used for the last mile, data centres are powered with renewable energy, and products are not shipped in single-use packaging (these conditions are rarely met together so far).

IADS perspective - Carbon counter: delivery van vs shopping trip 

Carbon counter delivery van vs shopping trip (Financial times)

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 5 trends this quarter: Culture Club retail, The online arms race, Category-busting for Gen Z, Life in the Metaverse and Designed with Data.

Culture Club Retail: how to get omnichannel customers spending time in physical stores:

• With a clubhouse approach, such as Diesel with a bar and restaurant, Kith Paris, Browns, Miele and a kitchen to be rented, cycling brand Ribble and a museum/showroom, Old Spice and a barber,
• By emphasizing art, wellness, nature and culture: Hyundai Seoul mall, Rituals concept store, Chinese bookstore Zhongshuge, L’Occitane, Louis Vuitton, Green Pea,
• By providing tech: Vans, Japanese telecoms company KDDI, Gentle Monster.

The online arms race : how to incrementally use tech to improve the overall experience and services provided to customers:

• By being speedy and convenient: Walmart’s smart box for home delivery, german Gorillas delivery company with 10 mn delivery delay, Inpost and label-free returns, Amazon smart shelf,
• By providing superior services: Harper concierge or Toshi’s ‘you try we wait’ service, La Moda’s logistical fleet, Louis Vuitton itinerant store, Amazon Prime wardrobe service, Breitling’s rental platform, Walmart’s shoppable cooking videos,
• By using tech to improve sustainability: skincare Ace of Air’s rented packaging, vegan sneakers and fashion, Ulta circular packaging, slow fashion initiatives.

Category-busting for Gen-Z: rethink the offer and experience to better suit their needs:

• By rebranding: CO by Colgate, Singular society by H&M, Neon Zebra by Pepsico,
• By emphasizing sustainability: JOI’s plant milk, non-alcohol bars, Touchland’s fashion hand sanitiser,
• By emphasizing wellness: Pejoy’s beauty snacks, Xiaoxiandun’s collagen ice creams, Mountain Dew, Siggi’s yogurts, Molson Coors’ non alcoholic mood boosting beverages,
• By providing new services: Coca Cola vending machines subscription.

Life in the metaverse : how to preempt the virtual world ?

• By building bridges between worlds: DressX overlays digital garments onto photos,
• By using tech: Nike’s use of blockchain, Microsoft’s holoportation,
• By going full speed: RTFKT’s premium digital fashion for virtual worlds, Decentraland’s virtual casinos, Buffalo’s digital only sneakers, virtual furniture.

Designed with data : how to use this resource to create products and optimise production:

• Preorders: Amazon build it, Bosch’s or Reebok’s crowdsourcing initiatives,
• Special stores designed to collect data: Indian beauty store Myglamm in Mymbai, Kayak’s first physical store,
• Special apps designed to use consumer imputs to design products: Finesse, Vizit, Algorithmic Perfumery, Beiersdorf’s made to measure cosmetics O.W.N.

GIR 78

What: A live event discussing BoF’s “Sephora’s Bid to Dominate Global Beauty Retail” case study.

Why is it important: Sephora is an interesting business to look at ahead of the IADS Cosmetics & Beauty

meeting to be held on 9 July 2021.

Case Study Sephora

What : McKinsey report about the trends shaping the sport’s industry.

Why is it important : Sportswear only decreased by 7,3% from 2019 to 2020.

Eight trends are shaping the sporting goods industry.

1. Athleisure, the new default and a competitive battleground.

Pandemic has served to blur the lines between work and free time, and there is a rising acceptance of comfortable wear in previously more formal contexts. With fashion brands entering this segment, sporting goods players need to leverage their innovation abilities and market knowledge.

1. Physical-activity gap, an opportunity to put healthy lifestyles within reach of all.

COVID-19 has triggered significant shifts in physical-activity levels. Around 40% of people are less active, while around 30% are more active. The sporting goods industry should embrace a multistakeholder approach to tackle physical inertia, particularly in the communities left behind.

1. Sustainability, the COVID-19-accelerated next normal.

The onus is on companies to secure sustainable supply chains. Since recycling is likely to be a bottleneck, brands need to engage with innovative concepts, such as direct-to-consumer circularity.

1. Digital-enabled fitness and exercise communities take centre stage.

Digital fitness won’t fully replace traditional sports and exercise but rather will enhance them in a “bionic” hybrid model. Digital workouts will continue to be a hot trend particularly when they offer an engaging and inspiring element and allow remote exercising in a simulated community setting.

1. Leap forward in online, an accelerating business-model shift to direct to consumer.

With online penetration expected to stabilize at around 25% in 2021, brands need to put digital commerce at the centre and accelerate direct to consumer, and retailers need to deliver seamless and integrated omnichannel experiences.

1. Marketing shift from assets to influencers, an opportunity to make digital pay.

To build awareness, credibility, and engagement, brands need to increasingly work directly with individual athletes as influencers, who have a much longer reach than events or associations.

1. Retail under pressure, but a critical part of the future channel mix.

To attract consumers back to stores, retail needs to find new purpose, new experiences, and new levels of convenience that cannot be offered digitally.

1. Supply chains, the flexibility imperative and a raised bar on agility.

In a post-COVID-19 world characterized by shorter demand cycles, e-commerce, and closer direct-to-consumer relationships, they will be table stakes in some markets. Amid persistent uncertainty, it will make sense to both build stronger supply-chain partnerships and explore alternatives such as near-shoring.

State of the sporting goods 2021 summary

State of the sporting goods 2021 full report

What: A paper on the improvement of sales analytics for a better decision making process.

Why it is important:  There is a significant gap between the need for data-based insight and the current methodology of information gathering. 53% of the organizations surveyed by Gartner attribute their poor sales data quality to inaccurate process leading to incomplete data.

Sales operations leaders are facing increasingly growing challenges:

• The decision-making process duration must be shortened, and it is expected that tech & analytics contributes to a better, shorter decision making time,
• Digital channels are increasing the number of options to retrieve information about the market, and make it harder to gather an helicopter view,
• AI is expected to help, but how?

Gartner mentions that AI will allow in the future to replace dashboards by ‘augmented analytics’, i.e. processes where the AI will perform many of the error-prone, inefficient tasks that stand between raw data and access to sales insights. Coupled to Continuous Intelligence, it allows to feed users with the right information when they need it.

While data science and usage of AI will grow among industries and organisations, dashboards and “one size fits all” analytics will disappear, to the benefit of tailor-made, customised analytics according to the needs.

strategic roadmap for sales analytics

What: the nature of work is changing.

Why it is important: offers a different perspective around the concept of a “workforce ecosystem” which remains integrated without the rigidities of a traditonal work culture.

Workforce Ecosystems

What it is: Two reports from McKinsey. A sort of checklist for CTOs of questions they should ask themselves

Why it is important: How CTOs can stop themselves from becoming overwhelmed, ineffective or tokenised.

The report by McKinsey looks at the capabilities of the CTO as well as some things which may undermine their role. A CTO should above all remain evidence-based. This stops them from taking sides. It is also important that a CTO should have wide-ranging skills across a number of areas. The best CTOs also are able to ignite passion and leverage efforts, and also have the means of rewarding outperformance.

On the other hand, poor governance can undermine the role. For example, if they are treated as just another member of the corporate staff and have no power to call upon leaders (including the CEO) to attend meetings for example, then they will be unlikely to make a difference. Similarly, if employees fail to see the urgent need to change, then their role will be an uphill struggle.

An updated version of the report notes that “companies today have no one on the executive team who owns the responsibility for navigating these shifts”. Along with this role of monitoring the external environment for significant and relevant new technologies, the CTO must be able to ensure their effective deployment within the organization.

The role of the Chief Transformation Officer

Why you need a CTO and how to make her successful

What:  NRF examines in depth the less obvious lessons learnt by some of its members

Why it is important:  The distinction between B2B and B2C is increasingly disappearing, especially with the rise of marketplaces for retailers and the need to remain attractive to brands. This requires a new marketing structure, in parallel with a firmer control on the supply chain, which is key in the customer experience now more than ever.

It is not news to affirm that retail has been changed, and so has the customer, by the Covid-19 pandemic. All retailers in the world have now learnt the hard way that omnichannel is key, which implies fluidity across all channels, powered by efficient data management flowing through bots and apps, and completed by trained sales associates. However, there are also less obvious lessons learnt, and discussed by NRF with US retailers:

• Supply chain is now part of the customer experience: any supply disruption is now an issue for customers, who will not wait and go to another retailer. On top of that (and we see it these days), on some products on shortage, customers favour retailers with the most efficient supply chain. What is needed: an end-to-end visibility on the supply chain, implying to know vendors and use AI to de-risk the processes.
• SKU rationalisation: it is tempting to multiply products in order to satisfy each customer’s needs in a very individualized manner. However, this leads to an unmanageable complexity. A rationalization process, in cooperation with vendors, is therefore key. The article cites sodas which are supplied with basic ingredients and then customized on the point of sales.
• AI should be used to predict demand, or at least detect weak signals. More generally, AI for retail is now.
• There is no need to make distinctions between B2B and B2C anymore, especially with the rise of marketplaces and the necessity for retailers to remain attractive to brands, who will not hesitate otherwise to go direct to consulmer.

The article concludes on mentioning that superior technology is needed in the new normal, however, employees still dictate customer experiences and investments in that field will remain critical.

Store re-openings are not a return to normal 

What it is: A report from IMD on the main tasks of the Chief Transformation Officer

Why it is important: The pace of digital disruption is increasing, and executives are feeling its impact more acutely. How can change be harnessed to deliver positive outcomes?

The IMD business school examines the increase in the number of appointments of CTOs (Chief Transformation Officers) in C-suite roles. They are hired to drive change and growth in a context characterised by digital disruption across all industries. The role is particularly useful in complex organisations with cost structures and value chains from a previous era.

The report looks at 8 key tasks:

• Customer journey mapping
• Business model design
• Business architecture
• Capability assessment
• Communications and training
• Incubation and scaling platforms
• Internal venture funding
• Agile ways of working

Given this range, it is obvious that a CTO should be able to develop productive relations with division and functional leaders.

Meet the Chief Transformation Officer

What: Learning from the UK, where online penetration reached 75% in 2020 and is likely to climb to 85% over the coming period, according to a survey conducted by McKinsey.

Why is it important: While online will continue growing, customers’ highest priorities go to the basics of retailing: value for money, stock availability, efficient delivery proposition and reliable product information.

Online penetration

Some 90% of UK consumers under 34 yo have shopped for fashion online in the past year. And 64% of the over-65 yo say they are comfortable with online purchases. Across all age groups, the average online spend as a proportion of the total spend is 55 to 65%. Among the key fashion categories, athletic apparel and loungewear have proved most popular over the past year, reflecting the global trend toward athleisure. Accessories such as handbags and belts have also seen rising demand.

The new fundamentals

As fashion consumers become more accustomed to e-commerce, retailers must ramp up their capabilities with respect to four key pillars:

• Discovery. Customers want brands to stay in touch via interesting news and offers and provide timely and relevant online advertisements.
• Browsing. Features cited as important include appealing product content and relevant recommendations.
• Purchasing. Customer priorities are focused on value for money, accurate sizing, a selection of brands and products, and considerable discounts.
• Experience. Seamless delivery is a highly rated attribute, and customers value being able to return or exchange products easily. Loyalty programs are perceived positively.

Looking forward: Six vectors to stand out

In an era of digital disruption, retailers should remember that customers are not focused solely on innovation. Indeed, consumers continue to place high value on traditional qualities such as reliability, value, and excellent service. With that in mind, McKinsey sees six themes to aid retailers’ in executing their e-commerce strategy.

Reinforce the value-for-money proposition. Because online consumers find it easier to compare prices across fashion categories and brands, focus on finding the right price points and assuring customers that they are getting excellent value (although not necessarily the lowest prices).

Curate intelligently. Invest in cutting-edge segmentation techniques to ensure that your assortment will appeal to your target groups. Leverage advanced analytics, as well as internal and external data, to generate deep insights into customer priorities and behaviours.

Balance inventory and availability. Interrogate data to more effectively manage availability and visibility. Direct customers to where there is stock and redirect them when stock is unavailable. If something is not immediately available, let customers know and make contact when it is back in stock.

Stay connected. Forge ever-closer partnerships with your customers, leveraging omnichannel engagement, nudges, and fresh ideas. However, don’t be indiscriminate.

Design websites purposefully. Outstanding content goes a long way toward inspiring purchasing decisions. Prioritize great photography and sharp copy.

Get it right on the road. Logistics are a key element of e-commerce business models and a significant driver of costs. Put more emphasis on guaranteeing that deliveries are speedy, on time, and reliable.

Six vectors of success in online fashion

What: the case for automation and AI in stores.

Why it is important: automation is an opportunity and retailers should prepare for skilling and reskilling.

The future of work in retail automation

What is it: The NFT craze has entered the fashion world.

Why it is important: Fashion brands need to decide how to respond as the fast-moving market for digital collectibles offers people a new way to communicate status in their increasing digital lives.

Leading fashion brands are examining the NFT space trying to understand the opportunities it could bring. But NFTs and cryptocurrencies are heavily hyped and are seen as risky and volatile.

Beneath the hype, there are signs that NFTs could have staying power. People have long assigned emotional and social value to physical objects like art and fashion goods. People tend to link designer handbags and fashion pieces to their creative identities. As we lead more and more of our lives online through social media and video games, the concept of collecting and displaying digital objects seems likely to grow.

Many fashion brands want to wait and see how the technology plays out in the space, but others are leading the way in application and use cases. LVMH understands the implications of the technology either through allowing their customers to bring their favorite products to the digital world, or through blockchain’s ability to combat counterfeit and bring light to the second-hand marketplace.

NFT strategies anchored in physical goods could be the key to unlocking the greatest value for the sector.

NFTs for Fashion Fad or Opportunity

What : Alix Partners’ report analyses the key driving shifts following the reopening of the UK after many months of total lockdown

Why it is important :  In addition to the expected need to go fully omnichannel, the results of the polls show that, in order to re-create a close relationship with customers, retailers will need to answer their primary needs, which will be, due to a rising anxiety, to reassure them.

Alix Partner reports that the UK is particularly optimistic, when compared to the rest of the world, regarding the vaccine roll-out and it is expected to positively impact retail as a whole. However, even though ¾ of polled customers are feeling positive, half of them also declare that they will stick to the habits formed during the lockdown, and rely on e-commerce to do shopping. This is obviously a hint for retailers to muscle up their omnichannel capabilities.

Another strong element that is mentioned in the report is that 20% of polled customers mentioned to  be ‘health concerned’, 7% were ‘budget constrained’ and 32% defined themselves as the «’most anxious’.

Consumer anxieties are driving shifts in buying behaviours, which will force retailers to invest in customers analytics, to fully understand and address said anxieties: health concerns, demand for sustainability and transparency, security. Making sure that retailers reconnect after having been so distant from customers during so many months forces them to clearly demonstrate a superior ability to listen to shoppers.

Alix Partner report

What: McKinsey’s survey on opportunities in the wellness market.

Why it is important: The wellness sector is seeing growth, which gives retailers and businesses many opportunities to capture the market share.

Consumers are starting to view wellness through a broader and more sophisticated lens, encompassing not just fitness and nutrition, but also overall physical and mental health and appearance. Consumer interest is continuing to grow with 79% of respondents of a McKinsey survey revealing that they believe wellness is important and 42% considering it a top priority.

The global wellness market is estimated to be worth more than USD 1.5 trillion with annual growth of 5% to 10%. A rise in consumer interest and purchasing power presents tremendous opportunities for companies.

Some of the trends in the wellness market are using more natural products, increasing personalization, using digital channels, promoting through influencers, offering more services and experiences, and extending categories into new lines.

The future of the USD 15 trillion wellness market

What it is: Looks specifically at the many roles a CTO must fulfil.

Why it is important:

This report identifies seven key roles across the company which a CTO must fulfil. It tackles the question from the viewpoint of transformational leadership. The role is particularly important in mature organisations where habits and structures may have become ossified.

The CTO needs to exercise idealised influence; intellectual stimulation; inspirational motivation; and individualised consideration. Creating a CTO role is a great way for organizations to ensure that they are planning for the future and have an interest in not only staying relevant but remaining cutting edge.

The CTO role explained

What: It is difficult for the apparel industry to choose the best or most recognized eco-label.

Why it is important: The overwhelming number of eco-labels are puzzling customers and too expensive and time-consuming for manufacturers. But solutions are emerging as the sustainability certification sector evolves.

In a survey including shoppers from the U.S., Britain, France, Italy, and Germany commissioned by the Changing Markets Foundation, 67% found it difficult to know if brands were meeting environmental standards. Retailers feel like eco-labels have become so confusing because of the politics involved.

Recognizing that sustainability sells, brands want to emphasize every little thing that they are doing, and they want to make a label for it. When some stakeholders – either industry or NGOs- want a criteria included and others disagree, the result is two different labels that cater to their specific interests.

Some brands can become so obsessed with reaching one label, that they cause more damage than good. Sometimes by making a product out of recycled materials actually uses more energy and water than using nonrecycled ingredients.

Sustainability is becoming more complex with everything considered from materials, chemical use, logistics, and working conditions over the whole life cycle of a product. This complicates labeling even further.

Some people believe that having governments set up an all-encompassing eco-label would be best, but this has proven to face a lot of criticism. Others prefer to self-regulate through eco-label aggregators like Good on You which ranks eco-labels. Zalando, on the other hand, is betting on the Higgs Index by using it as a standard across its site.

What will eco-labeling look like in the future?

As people become more informed, they will make their own decisions about the credibility of labels and only a few will remain in use. Companies will also become more transparent on their own which may negate the need for so many different labels. There could be a natural convergence to a single standard in each sector. Getting certified is time consuming and expensive, so there is a lot of pressure on eco-labels to harmonize through mergers and agreements.

Too Many, Too Confusing - What Does the Future Hold for Eco-Labels

What: Non-fungible tokens (NFTs) are trending and could have long lasting implications for luxury fashion.

Why it is important: NFTs allow luxury brands a chance to be more creative and connect with their customers in virtual worlds.

Every day NFTs are seeing new use cases and record sales. Fashion brands are trying to study the world of blockchain and its creative business possibilities to get in on the profits. Luxury brands like Gucci have expressed that It is “only a matter of time” before luxury brands start releasing NFTs of their own.

Luxury brands fell behind on the e-commerce trend, so there is a willingness to experiment with new technologies like blockchain. NFTs could be the next evolution of digital fashion skins, which have already been embraces by luxury fashion brands. The fact that NFTs are scarce and have the ability to accrue value can bring digital fashion closer to real fashion.

Companies are competing to create clean, beautiful, and premium experiences for NFT fashion. These applications would allow customers to try on luxury clothes or to wear them in gaming realms. NFTs give brands the chance to think beyond physical items, using the virtual world as a way to push the limits with elements that are not as easily achieved in reality.

Luxury fashion brands poised to join the NFT party

What: Marketplaces are handy for retailers as they allow to increase reach and assortment variety

Why it is important:  most of IADS members are engaging in that strategy. Marketplaces can be efficient tools, however, they should not cannibalize the retailer’s reputation for curation and brand selection. Above all, such solutions provide new approaches and tools to retailers, where marketplaces are efficient ways for retailers to understand the potential of new brands, and they onboard them on a wholesale basis.

Marketplaces are expanding fast, as they are considered to be one of the most adequate answers to customers’ needs: wide (almost infinite) assortment, reaching more consumers. Mirakl, a marketplace engineering company, signed with a    s many customers in 2020 than in 2018 and 2019 combined, including an airport.

However, marketplaces might not be a silver bullet for retail:

• Sellers have less control of their brand experience, with sometimes poor presentation,
• Being present on several marketplaces implies the risk to dilute the image or cannibalize sales,
• From the marketplace point of view, any bad experience in the shipping will fall on its operator whereas the responsibility is in the first place the brand’s (which explains why department stores such as El Corte Inglés also develop their own logistical solutions for their marketplace offers). From a broader perspective, the question of knowing who ‘owns’ the customer is still very  much here.

Among recommendations and good practices for brands doing business with marketplaces:

• Communicate constantly and transparently with retailers on any change and conditions,
• Consider hybrid approach: sell some products on marketplaces and wholesale others,
• Make the most of product bundlings,
• Encourage customers to leave feedback

Hudson’s Bay transformed its e-commerce site into a marketplace last March, with  new categories (pet suppliers, books, health, gourmet food, electronics, second hand) and a new business model: commission based on sales and a monthly fee. According to Iain Nairn, president and CEO, this model is extremely efficient in terms of brand onboarding leadtime: a week, vs. six to seven months in the normal wholesale process.

Mounting Marketplaces: Gamechangers but no slam dunk