THE ATTENTION MERCHANTS

*The epic scramble to get inside our heads*

Author: Tim Wu

Publisher: Knopf

Year: 2016

Comments: According to Wu, “the industrialisation of human attention capture” has its origins during the First World War with efforts to recruit more soldiers to fight. Advertising then took this publicly financed innovation and repurposed it for profit. A powerful group of commercial propagandists emerged, particularly in the US. These “attention merchants” not only enriched themselves but also performed a critical economic function, helping to deal with the West’s excess productive capacity by boosting demand.

Wu’s book tells the story of this conquest, recording the extraordinarily successful attempts by advertisers to occupy more and more of our attention over the past 100 years. It is less a history of advertising than of how this enclosure happened: the technologies, platforms and formats that have made it possible for media to penetrate an ever-growing portion of our waking lives.

Wu’s book isn’t just a history. It’s a polemic. The reason we need to understand where the attention industry comes from, he believes, is because it poses a mortal threat to human happiness and flourishing. It does this by inhibiting good attention, and encouraging bad attention. Good attention is “deep, long-lasting and voluntary” – the kind we get from reading a book. Bad attention is “quick, superficial and often involuntarily provoked” – the kind we get from checking our Twitter mentions. Good attention is the spiritual space needed for self-realisation. Bad attention makes us stupider, more susceptible to advertising and “less ourselves”.

Every media innovation since the invention of writing has triggered a moral panic about whether the human experience would be hopelessly corrupted as a result. Is it different this time ?

FRICTION

*Passion brands in the age of disruption*

Authors: Jeff Rosenblum and Jordan Berg

Publisher: Powerhouse Books

Year: 2017

Comments: How can brands stand out and build loyalty in an age where consumers are bombarded with marketing messages every moment of the day?

The answer, according to the authors Jeff Rosenblum and Jordan Berg, founders of Questus agency, is ti fight friction. “Friction is everything that gets in the way of what people want to accomplish in life. It’s the big things that prevent us from being what we want to be. It’s the little things that prevent from doing what we want to do. Fighting friction is about improving people’s lives in authentic, meaningful ways”. The book provides a system for embracing transparency, engaging audiences, creating evangelists, and unleashing unprecedented growth.

Presentations

Experience over transaction

Bucketfeet

Nespresso

Digital divide

Deloitte

Retail is about being connected with the customer.

"The experience can take place anywhere at any time, in person, on devices big and small and in wearable technology," said Pat Bakey, head of retail at SAP.

Although retailers are starting to implement customer-centric strategies to good effect, research from Deloitte suggests there is a long way to go before the current retail offer matches customer expectations, especially around the experience of digital in the shopping journey. Deloitte found that more than $11 million (or 36 cents on every dollar) of retail sales are influenced by digital – including online and mobile. "Integrating digital into customer experience is a business imperative," said Alison Kenney Paul, Deloitte’s vice chairman and leader of US retail and distribution. "For those who ignore it, you will be trapped in the digital divide."

Another good reason to embrace customer experience as a core strategy comes from the threat of commoditization. To counteract this, Nespresso is creating a customer experience around its direct order business, which is powered by data and integrated into its CRM, marketing, mobile and clienteling systems, with the aim that these areas have a contextual view of the customer across all channels in real time.

Offering memorable content and experiences needs to be integrated into the store experience. BucketFeet, a Chicago - based footwear brand that partners with artists, operates by the philosophy that content drives commerce. The brand calls its stores 'studios' and previews a different artist each month. According to Raaja Nemani, BucketFeet’s co-founder and CEO, putting storytelling first has lead to increased average order value, and repeat visits and purchases.

The changing world of luxury retail

The changing world of luxury

Luxury is about knowing the customer

Now more than ever, nothing about luxury is "one-size-fits-all." Today's luxury consumers are a varied bunch, ranging widely in ethnicity, in attitudes about ownership versus use and even in how they want to interact with retailers and brands. But they provide enormous opportunity: The global luxury market continues to grow by 10 million people annually.

"Luxury has morphed from two or three archetypal customers to its current state", featured Ken Nisch, chairman of JGA ; David Selinger, CEO and co-founder of RichRelevance ; and Matthew Woolsey, executive vice president of Barneys New York.

From Woolsey’s view, Millennials are “very naturally” luxury customers. Again, that’s not so much an indication of having money to invest, but rather an identification with the idea of themes like story, authenticity and heritage. As such, he said, personalization efforts “have to be about more than how you deliver a discount coupon. It has to be about story — it has to be about engagement."

One of the biggest mistakes retailers could make at this point, Selinger said, is to think that the same technology being used for the past five years will automatically apply to this generation. More than making the Internet simply a “big catalog,” Millennials are more interested in the where, why and how, and that must be conveyed. They’re also interested in doing things their own way: 82% of Millennials are more likely to make a purchase decision using their mobile phone than by speaking with a sales  associate. Therefore, Selinger said, the way retailers engage at the point of interaction has to change.

The luxury world has been slower than other retail sectors to embrace technology, but David Selinger, believes most brands have now got through the first stages of learning about e-commerce.

2015 is therefore likely to be “the first year luxury companies can apply technology in a strategic way to advance who they are,” he said.

New York retailer Barneys will be one of the first off the mark when it relaunches its suite of digital sites this quarter using a fully responsive design and higher levels of tailored content.

In-store: Connecting the physical and digital

JCPenney - The new digital divide

• Macy's: Highlights from Optimizing Omnichannel

John Lewis

The next killer app

We need to connect the dots

In-store, the emphasis remains on marrying the offline and online experiences within a physical environment. Rather than simply replicating digital in-store, however, there is a move towards digitalization of the in-store journey, which includes both enhanced experiences and unique-to-the-store encounters.

According to Deloitte research, customers using digital during their shopping journeys convert at a 40% higher rate than those who do not and it is important to tailor their experience to their needs especially where they are in the shopping process. “The more the digital information matches the shopper’s need, the more likely they will buy”.

Mobile formed a central part of retailer JCPenney’s Black Friday strategy with an iPhone app developed and launched within 87 days, in time for the shopping event. The app features include targeted products, a new look and a focus on making product the hero. It also includes a barcode scanner for use in stores and retains coupon information across channels.

Since launching, Mike Rodgers, chief customer officer at JC Penney, said conversion via the app is up 40% and the in-store barcode scanner is being used more than 1,000 times every day.

Citing company statistics, he said: “Retailers like JC Penney must have a robust digital experience driven by mobile to compete today. 69% of our customers use a digital experience before they go into the store, 36% during the store visit, and 14% after it”.

Seamless and frictionless are words often used to describe the customer journey, and Big Show 2015 is no exception. Paul Coby, IT director at UK department store John Lewis, summed up what these mean from a practical level: “To succeed you need a really good front end, but unless you have re-engineered the back end and are ready to cope with peaks in traffic, you’ll have real issues. There’s no point doing one without the other.”

Without the investment in the back end, retailers are not able to deliver on customer promises, whether that’s availability of goods or convenient fulfilment.

A single view of inventory is a key piece of getting this right. US department store Macy’s has worked on implementing inventory visibility, and its chief omnichannel officer RB Harrison predicts it will fulfil $1 billion worth of online orders from across its store base this year as a result.

From personalization to relevance & beacons

Julep: Crowdsourcing for dollars

Julep: Crowdsourcing for dollars

Cisco

From personalization to relevance

Personalization has been a dominant topic at retail conferences in recent years, whether its personalization of product, service or marketing.

Retailers give consumers more say in product design and consumers increasingly have more input as companies create new products, from social media and other crowdsourced feedback Julep shaped new beauty products with 3D printers and have let customers create the finished product at home,"The drive toward collaboration is something that starts deep within our company, that we then extend out to our customers as well," Julep CEO Jane Park said.

At Big Show, however, there was a repeated emphasis on relevance instead, driven by technologies coming to the fore in 2015. "Personalization is when the retailer knows your name," said Joseph Bradley, VP at Cisco Consulting Services, “relevance is when a retailer understands the context of your shopping experience, which includes location, speed and environment.”

“Incremental growth comes when you can move the decision-making closer to the customer,” said Bradley.

Beacons

Retailers were reminded of the need to experiment and test new technologies of they are to effect a change in the shopping experience. Beacons were among the technologies tested by US retailers in 2014. Big-box retailer Kohl’s rolled out beacons to 22 test stores last year. Digital head Ratnakar Lavu believes in their potential: “There are no real case studies yet as we’re still working it out, but I’m bullish on beacons – they will take off in our environment if we have the right customer journey.”

California-based exhibitor Aruba Networks believes the potential for beacons may come more from their use in mapping, particularly as a navigation tool in larger department and big-box stores, and in clienteling. “Beacons have been used to push offers but labor management is perhaps more relevant, such as employee notifications when a VIP customer walks in or someone comes in to collect an order,” said Jeff Hardison, director of product marketing.

Other presentations

The future of retail 2015, a manifesto to reinvent the store - PSKF

10 retail innovations - Ebeltoft

Technology insights - WGSN

Global forces and their implications on retail - Mc Kinsey & Company

Global retail innovation: the lastest concepts and ideas drinving change - Ebeltoft Group, Bilder & De Clerq, Birchbox

Omnichannel commerce

Author: Rana Foroohar

Publisher: Crown Business

Date: 2016 (first edition); republished 2017

Comments:*This book was voted one of the top business books of the year both by the Financial Times and by Bloomberg. The author has now joined the Financial Times and writes a regular column.

Rana Foroohar’s central argument is that finance should be a utility. Unlike an electric company, which allocates energy to businesses and people to power the economy, banks allocate capital. Theoretically, in an efficient financial system all an entrepreneur needs to do is have a great idea and a solid business plan. The bank evaluates the plan, loans the money, and makes a profit on the interest. It’s an easy, boring business. If things work out the entrepreneur becomes wealthy, people are employed, and the community receives long term investment. Foroohar presents the case that a revolution has taken place that moved finance from a supporter of the economy to the centre piece. It no longer allocates capital and gets out of the way; today finance manages nearly all aspects of business. It no longer helps make society; it takes from society.

One of her most telling statistics is that only 15% of all capital flowing out of financial institutions today is being invested in businesses. The rest remains in a closed financial loop, part of the “financialisation” of the economy.

She traces the shift back to the post-war management of Ford which “shifted power from engineers to MBAs … Accountants were replacing tradesmen,” Foroohar writes. “Making money was slowly but surely replacing the goal of making great products.”*

*The most damaging legacy of this development may have been its impact on labour relations. Labour became a commodified input. It was now something to be managed and squeezed; just a cost of doing business. Never mind that one of the major drivers of innovation is the collaboration of the factory floor and the engineering team. There’s a reason, for Foroohar, why Bell Labs designed their buildings to house both engineering and manufacturing—a strategy Tesla uses today. While Japanese and German firms were becoming more productive and agile by engraining labour into the strategic decisions of the company—America was building walls and eroding key competencies by outsourcing production.

Thus, the modern financial system has destroyed America’s ability to innovate. The entire system rewards short-term gain, over long-term investment. The good thing, she notes is that none of this is permanent. “We can remake [the economy] as we see fit to better serve our shared prosperity and economic growth.”*

See video interview of Rana Foroohar

See Article by the author: Why management by numbers doesn’t add up

Monocle, the monthly lifestyle & news magazine founded in 2007 by Tyler Brulé, organized a new yearly event designed to gather business minds and reflect about how business – and the world – moves forward now.

Among the topics covered at the conference, several were directly connected to the IADS fields of study: how city life can bounce back after a summer slump, how the travel industry will get moving, how to fix the luxury industry, the evolution of the office as a space and as a practice, and, finally, retail innovations. Speakers included the Mayor of Athens, the head of security policy for the Swiss Federal Department of Defence, the President of the International Red Cross Committee, the CEOs of Vitra and V-Zug, the owner of the Soho House and Hyatt in Amsterdam, or the co-founder of On running shoes.

Both the subjects and quality of speakers led IADS into attending this new conference. Out of these intensive 12 discussions packed in a day, IADS identified the following key findings, that we confront to our understanding of the department store situation now:

About the global economic situation:

All speakers including UBS were confident about a upturn of the global economy, even though the pandemic will leave its mark on how we do business and appreciate risk.  Hoteliers are convinced that not only things will come back to “normal” but they will surpass it (trade, travels, tourism), and the art market leaders think that business will not “bounce back” but “bounce forward”, with new ways to use digital to sell even more physically.

About the notion of public space: “private spaces do good when they go public”

Hoteliers review the way they interact with the city: the lobby is a public space where the whole town is welcome and mingles. Why? Because in the frame of selling an experience and an emotion the traveller can only find in one given destination, interaction and understanding of the locals are assets. Making the whole city come to your lobby is a way to be unmissable to it.

Going even further, some spaces are thought to be both public and private, by mixing purpose and economic interest. Food park Mercato Metropolitano in London, opened in 2016, is thriving by having simple, but strict rules: no single-use plastic and big brand, everything including beer made local and fresh, social commitment to women entrepreneurs and local communities by providing jobs and free meals to poor families. The result? The business will post a €24.5m turnover this year, in pandemic times.

On Sneaker co-founder uses business to revitalize villages. In Swiss village La Punt, he is teaming up with architect Norman Foster to create a “village in the village”, where worker from the whole world will be able to come in teams and co-work together in a beautiful surrounding. Benefits? The village gets education, jobs and a doctor.

Those three topics echoed very much many of the conversation we had at IADS with our members about traffic: post-Covid, customers need a good reason to come to a store. You can of course sell them a product (but Amazon too), an experience (but monobrands stores too), or make them come because of the emotional bonds they have with you (“popular” stores). And a good reason to come is the purpose of the space they are visiting. This echoes the new “agora” at the heart of the Monoprix Montparnasse in Paris, where square meters are literally given away to local associations to make sure Monoprix is at the heart of the neighborhood.

About the customer

Hoteliers dismiss the idea that “customer is king”. In the post-covid world, we are all human beings first, looking for experiences. This is why instead of bringing everything on a plate, they train their staff to befriend their customers, whom they invite to “come as a guest, leave as a friend”. This is also the essence of a good retailer, and can be related to the efforts made by Galeries Lafayette in their Champs Elysées venture, where selling personnel is trained and equipped to create a personal bond first and foremost, or what Farfetch promotes with their “Store of the future” in Browns (London), using technology to allow sales staff to focus on customers instead of low value activities.

About retail: how can you avoid commoditization?

• By questioning what you do and how. Hotels are not anymore places where you only sleep. Business gets more focused (smaller, destination and experience-oriented) and many predict difficulties for larger chains privileging quantity over quality. This mirrors the department stores business, with some having opened loss-making locations in the past for the sake of growth (see John Lewis in Birmingham, Neiman Marcus in Hudson Yards, Manhattan, both closed today) while smaller, more focused retail destinations still do well.
• By helping others companies: design furniture Vitra is now using its knowledge of what makes a great office to provide consulting to other companies, helping them to rethink underused or unused post-Covid offices, give them a new purpose and help bring their staff back and happy. Interestingly, they did not mention the same potential service to be provided at the customer level (more and more interesting by his/her conditions of home office). Bang&Olufsen already provides this service by coming to the place and checking it before setting up its appliances and sound systems.
• By sharing knowledge over selling a product. Swiss luxury white goods manufacturer V-Zug does not pretend to sell a luxury product, but a luxury experience. How? By organizing cooking classes and food academies with French chefs in their “Zugorama” showroom, where customers can come, learn in real conditions and be convinced by the superior quality of their products.
• By sharing experience over selling a product. Swiss shoes manufacturer On Running decided to sell their new model by subscription only. It is not possible to fully own it, as the customer pays a monthly €29.9 rent, gets it replaced every 6 months by a new pair (On takes care of the recycling) and needs to give it back when the subscription is over. We have already seen such case in other industries where the customer does not own what he buys, like Tesla: when a car is bought, all options taken belong to Tesla, not the owner (allowing an Tesla upsale on said options even on second-hand resales by former owners). Can this be addressed by Department Stores? Is a subscription model sustainable? Recent examples from Pret à Manger in UK could be a good hint, which we will further elaborate in a coming analysis.

About sustainability: claiming to be sustainable is easier than being it. Why not communicating on the efforts made?

Sustainability is seen as obvious as electricity and wated in the hospitality business. However, hoteliers reckon it is difficult to implement when more than one location is operated (procedures, materials…). On their side, manufacturers reckon it is difficult to achieve without altering the quality of their products (especially in luxury and technical fields), this is why both sides proposed during their talks to look at different ways to address sustainability in a very immediate and effective manner:

• In routine operations: for hoteliers, a breakfast made only with local food is sustainable. Retailers & brands are massively looking at this option by teaming up with sustainable brands (“Go for Good” in Galeries Lafayette, “Rethink” in Manor), running however the risk of being accused to greenwash by transferring the responsibility of the sustainability claim on the brands sold,
• In challenging the way business is conducted: design furniture editor Vitra used to spend the same money for 5 days of presence at the Salone de Mobile on a seasonal basis, than an investment lasting 15-20 years on the Vitra Campus. After the Covid wake-up call, the money was channeled into digital, which helped them have a good season during pandemic, while significantly reducing ecological foot print and hassle. This is a trend we have seen as well in Fashion with virtual showrooms. Interestingly enough, in both cases this led to drastic choices when building the collection: create more commercially efficient products and avoid novelty for the sake of novelty. IADS members merchandising directors, in a talk we held on the 21st of September, mentioned that this new way of working, albeit not 100% ideal, especially in terms of touch & feel, allowed a significant gain of time and energy, to focus on customer’s actions.
• In being honest with customers: Vitra is not ready to replace cow leather with pineapple leather, for one simple reason: the latter will last 2 years, which is not the image the brand wants to give. This is the reason why they rather completely assume their material choices, but with a free 30 years full guarantee. For them, low replacement rate is also part of contributing to a more responsible consumption. Another example from Vitra is their plastic chairs: they know that plastic is not good for the planet but have not found a replacement. So they found a supplier producing the material from single use plastics: the plastic chair, being valorised by an efficient design, branding and storytelling, will last 50 years and paradoxically contribute to saving the environment. It takes some “guts” to admit that, yes, this is real leather, or yes, this is plastic. However, by insisting on the impact on the product longevity, it also makes the customer more responsible, and more connected, with the product he is buying in full knowledge.

As a conclusion, this series of conferences, which appeared at the beginning of the day quite heterogenous, made sense in the end by the common red thread which is the role of public space and how to use it collectively. This is an even more acute question now that we have all, in every country, gone through the same experience, and customers, in every market, have changed behaviour and expectations quite significantly.

More details on the 12 conferences in the document to download below.

full IADS report: The Chief Monocle Conference 2020

The Chief Summit website

Speaker line-up:

• Ruth Rogers of The River Café
• Emma Tucker of the Sunday Times
• Peter Maurer the President of the International Committee of the Red Cross
• Paul Geertman the CEO of Aedes Real Estate
• Alberto Bertoz the SVP of V-Zug
• Sharan Pascricha the CEO of Ennismore

among many others

What: Viva Technology, or VivaTech, is an annual technology conference dedicated to innovation and startups that is held in Paris, France.

Why it is important: IADS attended the salon in Paris to scout out the key trends and startups that could be of value to our members. We have highlighted interesting trends and solutions that were strongly featured.

Retail innovation trends highlighted at VivaTech 2022

What: Tech for Retail offers a complete and relevant overview of digital tools and technological innovations dedicated to the retail industry.

Why it is important: The conference pulls together interesting companies and solutions that are showcased over two days. This year, IADS attended the salon in Paris to scout out the key trends and startups that could be of value to our members. We have recounted the major themes and companies that are offering solutions to these trends.

Tech for Retail

Themes 2015

![GDI 2015

The 65th International Retail Summit identifies the crucial challenges for tomorrow’s retail and answers questions like:

• What does Borderless Retail mean, and how does it work?
• What new products, services, and concepts are evolving at the interface of mobility, consumption, private and work life? How does robotization change retail?
• Which global consumer trends are relevant – and which ones aren’t?
• What start-ups are challenging traditional retailers?

Expect answers from industry giants and promising young entrepreneurs: Douglas Rushkoff, bestselling author and thought leader of the digitalized world, will hold the keynote speech. Food retail pioneer Oscar Farinetti, founder of Eataly, shows how to combine «local» and «global» successfully. Other big names include Andrew Parkinson (Operations Director FC Liverpool), André Maeder (CEO KaDeWe) oder Christophe Cornu (CCO Nespresso).

Author: Pietra Rivoli

Publisher: Wiley

Comments: *Pietra Rivoli is a professor of Finance and International Business at Georgetown University. Tracing a T-shirt's life story from a Texas cotton field to a Chinese factory and back to a US storefront before arriving at the used clothing market in Africa, the book uncovers the political and economic forces at work in the global economy. The story encounters a mix of market forces and protectionism and demonstrates the importance of globalisation to fashion, as well as how some countries have benefited from globalisation such as Taiwan and Japan, some have become less poor such as China and India, and how others have seen no benefits, mostly African countries.

The backlash against globalisation which started in the 1990s, has generalised. The main story now has become environmentalism and sustainability. And indeed with the current covid-19 pandemic, globalisation as a whole is being reassessed; which is why the author did not want to produce a third edition, in spite of the topic’s burning topicality.*

What: A series of testimonials from executives involved in managing transformation and making choices in terms of new KPIs to pilot their activity

Why it is important:  Digital transformation implies: