Understanding Retail - CityCo...Dimensions shaping the retail landscape • Living in a ‘virtual’ world • Future store is on the mobile device • Shop anytime, anyplace, many

Understanding RetailInverting the Kaleidoscope

Tarlok N Teji

September 2015

• Six interrelated dimensions

• Regulation & compliance

• Global influence

• Socio-demographic changes

• Physical dynamics

• Digital dynamics

• Customer Lifetime Value

• Summary - Trending for 2016

Agenda

©Teji/Understanding Retail/Sep 2015 3


Social and Demographic

Global Influence

Regulation &

compliance

Digital dynamics

in

the Virtual World

Customer Lifetime

Value

Physical dynamics

(supply chains & retail space)

Take away #1 : Six multi-relational ‘Mega’ trends & ‘Giga’ shifts

Understanding Retail – Six Dimensions

5©Teji/Understanding Retail/Sep 2015

• Living Wage

• Business Rates

• Competition and Markets Authority (CMA)

• Financial Conduct Authority (FCA)

• Serious Fraud Office

• Grocery Supplier Adjudicator

• Bribery Act, Data Protection & Privacy

• EU Directives

• Consumer Credit

• Sunday Trading

• Trading Standards

• Fair Trade, Organic, GM

• Weights & Measures

• Health & Safety, Public Liability

• Hazardous Materials

• Food Safety, Product labelling

• Imports & Freight

• Customs & Excise, VAT, Corporation Tax

• PAYE, NI & Pensions

• Waste (weee etc.), Carbon Reduction

• On and On and On and On ……

Take away #2 : Business complexity and Consumer confusion

Dimensions shaping the retail landscape



Can you name the Top Ten

Global Retailers?



Rank Company Country Net Revenue US $m

1 Wal-Mart U.S. 476,294

2 Costco U.S. 105,156

3 Carrefour France 101,844

4 Tesco U.K. 100,213

5 Schwarz Germany 98,662

6 Kroger U.S. 98,375

7 Metro Germany 86,393

8 Aldi Germany 81,090

9 Home Depot U.S. 78,812

10 Target U.S. 72,596Source: Global Powers of Retailing 2015, DTT, London – adjusted for group revenue



• Travel & TV expanded tastes and desires

• Mobile & Internet has democratised information

• UK Brands are now global e.g. Burberry,

Jaguar

• Sovereign Wealth Funds & overseas investors

buying UK assets (Harrods / House of Fraser /

New Look)

• Labour and capital flows in EU

• Luxury in Demand

• Middle Classes in Emerging Economies

(BRICA)

• Water, Food & Fuel diversion to BRICA

• Competition from overseas retailers

• Overseas shoppers wanting UK products

• Search for Value and Values

• Global economic contagion

• UK Retail sector cannibalisation

• Retail growth is either International or Mobile

(excluding discounters)

Commodity Price

Pressure & Scarcity

Take away #3 : Global influence on UK performance continues



• Order Lead Times

• Ethical Sourcing & Supply

• Efficient Consumer Response

• Delivery & Collection

• Click & Collect

• Home delivery, defined delivery windows

• The last 100 yards

• Returns & recalls

• High Street v Out of Town v On-line via mobile

• Leasehold obligations, Business rates & utilities

• In-store design, Environmental footprint

• Structural shift in property development and

shopping centre ownership

• Community engagement

• Re-imagine the high street

• Over supply & capacity of shop space

Take away #4 : Space and Speed the final ‘physical’ frontiers for retail



1970 1975 1980 1985 1990 1995 2000 2005 2010 2015

WestfieldStratford

1.9m

Eastgate& Clarence

Leeds2.7m

Metro CentreGateshead

1.8m

Trafford CentreManchester

1.8m

thecentreMilton Keynes

1.8m

Bluewater Dartford

1.7m

WestfieldWhite City

1.6m

Princess & Charles SqBracknell

1.5m

ArndaleManchester

1.4m

MeadowhallSheffield

1.5m Cabot CircusBristol1.5m

LakesideThurrock

1.4m

Liverpool ONELiverpool

1.4m

St. DavidsCardiff1.4m

East KilbrideGlasgow

1.2m

Bullring Birmingham

1.1m

WestfieldDerby1.1m

HighcrossLeicester

1.1m

WestfieldMerry Hill

Dudley1.1m

Eldon SquareNewcastle

1m

KingfisherRedditch

1.1mThe CentreLivingston

1m

The FestivalBaingstoke

1m

Telford1m

Retail Capacity Supply increases over 45 years

Top 25 Shopping Centres by Square Feet



54m ft2

New Retail

Space * Just from the Top 50 sites - there are over 200 in the UK

Take away #5 : Retail space supply exceeds demand



Flat Spend Trend

Take away #6 : Consumers search for Value and rediscover their Values

• Recession and income squeeze

• Better travelled, educated & informed

• More mobile and technology savvy

• Diversity through immigration

• EU labour movements

• Decline in birth rates

• Ageing population

• Overweight

• London and South East v Regions

• Long-term affluence and wealth increase

• Debt reduction

• Home ownership increase

• Unemployment increase –

youth & females

• Shopping by mission

• Complexity :

• Age;

• Gender;

• Life-stage;

• Life-style; and

• Disposable Income



Source: Office for National Statistics


Food



Clothing & footwear









• Living in a ‘virtual’ world

• Future store is on the mobile device

• Shop anytime, anyplace, many ways

• Permanently connected digital world

• Mobile will be the primary medium for

Internet access by 2020

• Many places skip fixed line e.g. India, Africa

• Rush for ‘ePayment’ solutions

• RFID & Near Filed Communications (NFC)

still to arrive (i.e. Tap & Go just starting)

• App dominated but full with risks

• Big Data debate

• Personalisation v Privacy

• The ‘big issue’ is Authentication of:

• People;

• Organisations; and

• Products

• Cybersecurity: Spiral of Fraud & ID Theft

Take away #8 : Mobile is a bigger wave of change than the internet

‘δTailing’ = digital retailing

TNT/Understanding Retail/Sep 2015 18

Amazon eBay email Google Facebook iPhoneWebcam Spam Blackberry broadband YouTube

Bluetooth Skype HD plasma text PS3 Twitter Wii Blog 3D MySpace mobile HD plasma eBay

Bluetooth Facebook Google text Twitter WiiGoogle webcam Spam Blackberry Facebook3D Amazon mobile Windows email iPhone

HD plasma webcam Skype PS3 YouTube textMySpace Blackberry Twitter text Google Blog

eBay email Blackberry mobile YouTube Wii PS3Facebook Bluetooth Skype HD plasma iPhone

Broadband Skype YouTube Bluetooth spam Wii

The data volumes are so big we

need new words of measurement Zettabyte1,000,000,000,000,000,000,000 Bytes



• Exponential Times

• Speed of Change

• Mega Trend – it’s a Giga shift

• Global

• Ubiquitous – 7bn+ devices

• $Trillion industry

• Internet of Things

• Habit Changing (Wallet/Purse, Keys, Phone)

• Hidden complexity and risk

“In the USA, the average eight to 18 year old spends 11 hours a day

with a screen in front of them….”

Professor Michael Solomon, Hot Topics in Branding and

Communication, May 2011, MBS

Take away #9 : mobile device is the ‘screen of life and remote control’

21



Transparency, Trust and Expectations

• Loyalty – Cards, Coupons, Offers

• Big DATA and context marketing

• Word of Mouth: SMS, Facebook, Blogs & Twitter

• Customer Service

• In-Store effectiveness

• Call Centre effectiveness

• On-line effectiveness

• Information & Honesty

• Power & Trust

• Keeping TRUST

• Share of Wallet:

• Brand and Range extension e.g.

• Non-Foods

• Petrol

• Mobile & Utilities

• Financial Services

• Brand dilution and boycott

Take away #10 : Trust and privacy are the future battlegrounds for

consumers hearts and minds


Social and Demographic

Global Influence

Regulation &

compliance

Digital dynamics

in

the Virtual World

Customer Lifetime

Value

Physical dynamics

supply chains & retail space

Take away #1 : Six multi-relational ‘Mega’ trends & ‘Giga’ shifts

Understanding Retail – Six Dimensions

Mobile, Velocity,

Experience and

Innovation

Summary -Trending 2016

• Mobile

• Velocity

• Experience

• Innovation

Wearable Tech

Internet of Everything

Security

Speed to market

Speed to respond

Speed to deliver

Entertainment

Emotion

Education

Enlightenment

Engagement

Market disruption

Made to order

Customer Labs

Adaptation

Change

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Documents

Understanding Retail - CityCo...Dimensions shaping the retail landscape • Living in a ‘virtual’ world • Future store is on the mobile device • Shop anytime, anyplace, many