Introduction

Coresight Research is a research partner of Shoptalk Europe 2023, which took place May 9–11 in Barcelona, Spain. Shoptalk Europe is an annual retail conference focusing on retail innovation.

We present our top insights from day three of Shoptalk Europe 2023.

Shoptalk Europe 2023 Day Three: Coresight Research Insights

Emerging Channels: Retail Media and Personalization

Emerging Channels Outside of Europe

In the “Leading-Edge Retail Innovations from Outside of Europe: China, US and Beyond” session, Marie Driscoll, CFA, Managing Director of Beauty and Luxury at Coresight Research, interviewed Benjamin Thompson, Head of Digital Innovation at Endeavour Group, the owner of Mixin by Endeavor, a retail media group. Endeavor has been experimenting with retail media since 2017, using personalization to provide relevant discovery and experimentation with a regional twist. Recently, Endeavour invested in Fortress, “the Southern Hemisphere’s largest video gaming and esports entertainment franchise,” to enter the gaming and entertainment business. Over the next two years, Endeavour’s top priority is to partner with technology providers to enhance their customer experience, create content at scale and further personalize their content.

During the session, Driscoll also interviewed Gareth Locke, Chief Growth Officer at Mytheresa, and Joaquín Mencía, Chief Innovation Officer at Chalhoub Group, about recent innovations at their companies, emphasizing new consumer opportunities and emerging channels. At Mytheresa, an online fashion and luxury retailer, the company has launched four exclusive designer capsule collections from Didu, Jacques Wei, Susan Fang and Xu Zhi, showcasing their commitment to the Chinese luxury ecosystem. According to Locke, China provides a serious luxury opportunity. For more on the Chinese luxury ecosystem, read the Coresight Research report, Consumers’ Appetite For Luxury in a Post-Zero-Covid China.

Chalhoub Group, a luxury retailer in the Gulf Cooperation Council (GCC), is also looking for new regions for growth, especially where it sees similarities in consumer behavior to regions where it is already operating. Likewise, it is remaining opportunistic and creating owned brands to leverage white spaces it sees in the market. Meanwhile, it is also meeting consumer demand for sustainability by investing in recyclable packaging, reselling pre-owned merchandise and offering made-to-order sneakers. Specifically, the “pre-loved” merchandise creates a flywheel effect via the buy-back program, enhancing customer loyalty.

Driscoll during the “Leading-Edge Retail Innovations” session
Source: Shoptalk Europe

During the “Raising the Bar in Retail Media” session, Wouter Kolk, CEO, Europe and Indonesia, at Ahold Delhaize (Ahold; a Netherlands-based multi-sector retailer), alongside Selma Postma, Chief Digital Officer, Europe and Indonesia, at Ahold, announced that their company’s European retail media program—AD Retail Media—will focus on the Netherlands and Belgium and non-endemic advertisers (i.e., products and brands not sold in Ahold’s stores), creating a highly personalized experience. Postma underscored the importance of personalization in a world in which consumers are overwhelmed with messages; however, personalization requires data, and data requires consumers’ trust. To this end, Postma revealed a “simple truth:” If a customer trusts you, they will keep doing business with you and share their data.

Ahold’s CFO previously targeted €1 billion ($1.1 billion) in revenue from complementary revenue streams, and Postma noted that this income stream is needed for the company to invest in personalization and the omnichannel journey. Later, Kolk discussed how industry collaboration is required to address fragmentation in retail media, a subject we heard much about on day two of Shoptalk Europe 2023.

The “Raising the Bar in Retail Media” session: Kolk (left), Postma (center) and Ben Miller, Director of Original Content at Shoptalk (right)
Source: Shoptalk Europe

We heard more on retail media from Stephanie Phair, Group President at Farfetch. While discussing retail media, Phair stated, “there is a playbook for that,” pointing to Amazon and Alibaba’s Tmall as go-to examples of monetizing large-scale audiences. In retail media—as in retail more generally—processes need to be adapted for the luxury sector. Phair noted that Farfetch has built its Media Solutions business through brand-building partnerships, including telling stories for Valentino and Ferragamo through various livestreams, product shoots and generative AI initiatives.

Phair of Farfetch
Source: Shoptalk Europe

Retail Media Partnerships

Retail media was further discussed in the “The Retail Zeitgeist: Four Trends Transforming Retail’s Playground” session, which featured Shoptalk’s Krystina Gustafson, SVP of Content, and Ben Miller, Director of Original Content. There, Miller discussed seeing traditional retail relationships change due to the evolving retail media landscape. Now, it is the retailers have an advertisement-related product as well: their audience. According to Miller, there are three main criteria brands should use to assess if a retail media partnership is successful:

1. The size, characteristics and uniqueness of the intended audience
2. The availability, timeliness, accuracy and source of the data obtained
3. The ability to deliver great content through the formats available

“Retailers must be prepared to demonstrate the value of their networks to prospective advertisers to avoid this just becoming a new cost of doing business,” he explained.

Elodie Perthuisot, Chief E-Commerce, Data and Digital Transformation Officer at Carrefour, also spoke on retail media. She stated that retailers’ abundance of real shopper data means they can be better than a traditional advertising network—retailers can now know what happens after the advertising impression, whether or not consumers complete their purchases, and what customers do the rest of the time—i.e., before the advertising impression. Still, Perthuisot remarked that a retailer is not traditionally a good advertiser, so Carrefour has partnered with Epsilon and Publicis to create a hybrid company, somewhere between a retailer and an ad agency.

Data, Opt-Ins and Expansion

Separately, Carrefour’s Perthuisot discussed:

• Consumers’ willingness to share data with retailers—Carrefour found that some 80% of shoppers will share their data as they like having personalized information, while 20% do not agree to data opt-ins.
• Omnichannel customers are better customers—At Carrefour, shoppers purchase an average of 20% more after they become omnichannel shoppers. Perthuisot said that is because shoppers like the omnichannel experience more and so become more frequent purchasers. In turn, greater frequency means more data, which feeds into a more personalized experience, creating a virtuous cycle.
• The Israeli ecosystem—Carrefour announced this week a tranche of store openings in Israel, a new country for the company, according to Perthuisot. The retailer also announced six partnerships with startups in the Israeli ecosystem. Perthuisot said this will give Carrefour a head start, as the Israel startup ecosystem tends to be one to two years ahead of other countries’ startup ecosystems.

Perthuisot of Carrefour (left) and Miller of Shoptalk (right)
Source: Shoptalk Europe

Shopper Engagement: Frictionless, Seamless and Continuous

While e-commerce has undoubtedly improved the buying experience, many brands and retailers are still looking for ways to make their online shopping journeys fun and engaging. In the “Retail Zeitgeist” session, Gustafson and Miller discussed four ways in which brands and retailers can better engage with shoppers: social media, video, the metaverse and generative AI (artificial intelligence).

Gustafson warned that social media and video growth could slow in Europe and the US if “government scrutiny” of TikTok becomes legislation. However, such legislation could lead to an increase in traffic for other social media platforms, including Facebook and Instagram. Gustafson also pointed out that video is a meaningful way to engage with consumers, stating that live shopping can help drive awareness, discovery and interact with consumers seamlessly. Ultimately, efficiency and engagement are not mutually exclusive. The retailers who invest in technologies that tick both boxes will place themselves in a stronger position to win.

When discussing the metaverse and Web3, Gustafson explained that she understands how it can be “ tempting to dismiss an emerging technology after it’s gone through a massive hype cycle;” however, retailers need to keep their finger on the pulse of the modern shoppers. Gustafson pointed out that Roblox, a non-blockchain game with an emphasis on content creation, has nearly 60 million daily active users, more than half of whom are over the age of 13, and has started partnering with fashion brands. Shoptalk also expects many other Web3 technologies, such as augmented reality (AR), virtual product try-ons and NFT (non-fungible token)-based loyalty programs, to remain as they “offer innovative ways to make retail fun and interactive.”

As it was at Shoptalk 2023 in Las Vegas, generative AI was a topic of much conversation at Shoptalk Europe 2023. Gustafson stated that since ChatGPT’s public launch in November 2022, mainstream and investor interest has grown rapidly, “with funding to generative AI companies jumping to €2.4 billion last year.” This is likely because generative AI hits the “sweet spot” for brands and retailers: it allows them to personalize content and boost shopper engagement, all while cutting costs. While personalization has been a retail buzzword for years, the maturation and adoption of generative AI will bring retail into a new era of personalization at a scale that was not previously possible. This will be even more critical as shoppers look to engage with retailers across many platforms, and retailers need the content to support their engagement.

Gustafson and Miller during the “Retail Zeitgeist” session
Source: Shoptalk Europe

Store Experience: In-Store Shopping—Easy, Entertaining and Inspirational

In the post-pandemic world, in-store experiences are more important than ever as consumers place a greater emphasis on in-store shopping. During the “Providing Inspiration and Ease with Innovative Store Designs and Technologies” session, panel members from a variety of companies—COS (H&M Group), Frasers Group and Rituals Cosmetics—discussed how new store formats, experiences and services can make in-store shopping easy, entertaining and even inspirational.

Rituals Cosmetics is a “continually evolving” company, according to Richard Lems, Director of Format and Design at Rituals. It does so by using laboratory stores to test new ideas, such as its Mind Oasis concept. At the company’s first Mind Oasis location, it sells no products. Instead, the Mind Spa is intended to relieve stress, using a combination of modern science and meditation. Services offered at the Mind Spa include breathing sessions and “brain massages.”

COS, a fashion brand owned by H&M, is utilizing smart stores, which include digital overhead radio frequency identification (RFID) readers in all rooms, allowing employees to instantly know if an item is in stock. These RFID readers also provide a constant view of where garments are, creating an up-to-date store map that new employees can use to better clientele. Meanwhile, at Flannels, a luxury retailer owned by Frasers Group, has reimaged its flagship destinations to bring in younger shoppers, according to Lauren Barrie, Group Head of Luxury Retail at Frasers Group. The company’s new flagships offer food and fitness services, as well as trade-up programs, which keep customers coming back.

The “Providing Inspiration and Ease with Innovative Store Designs and Technologies” session
Source: Coresight Research

In the “The Retail Zeitgeist” session, Gustafson stated that we are entering a “renaissance in physical retail” and reiterated that companies are looking to provide shopping experiences that are both convenient and entertaining. Gustafson also remarked on how consumers expect seamless shopping experiences, meaning they are “underpinned by technology.” When creating a seamless in-store experience, she advised that companies try and make “continuous” journeys where customers can easily switch from channel to channel without interruption or losing their place. For example, stores can have dedicated spaces where customers can pick up online orders. Gustafson also recommended that all shopping journeys be frictionless, meaning customer pain points are eliminated wherever possible.

While delivering continuous, frictionless journeys—while remaining engaging and convenient—will be challenging for most companies, the effort promises great rewards. According to Gustafson, “this type of unified retail experience represents the next wave of omnichannel, as consumers will not only expect to be able to shop where they want when they want, but demand that their experience move flawlessly between channels.”

Technology: Emerging Tech and the Grocery Sector

In a session on grocery technologies, we heard from Bruno Mourão, Head of IT Transformation and IT Strategy and Experimentation at Sonae MC; Oli Baggaley, Program Director, Group Mechanization, at Ahold; and Ozenc Okyay, Digital Commerce Director at Unilever. During the discussion, they covered a variety of emerging technologies that are now being implemented in the grocery sector.

• Automated checkout—Sonae MC, a food retailer in Portugal, deployed its first autonomous store two years ago—and has not opened another autonomous store since then, which “speaks for itself,” according to Mourão. He noted that “frictionless stores” have moved the friction from checkout to check-in, making it more difficult to enter the store. Baggaley pointed to the binary nature of fully autonomous stores—no app, no entry—which will likely present problems for grocery retailers seeking to cater to all shoppers. Sonae’s autonomous store has added self-checkouts to help resolve this exclusionary challenge. Baggaley emphasized that retailers should approach autonomous stores and other checkout technologies by reviewing what problem they are trying to solve.
• Metaverse—Unilever, a CPG company, is currently present in the metaverse to learn and connect with a subset of consumers, rather than for commerce, according to Okyay—the commerce stage will likely come later. On the other hand, Baggaley argued that there are currently no clear use cases for the metaverse in grocery. Instead, Ahold is more focused on augmenting stores with technologies such as AR, which could, for example, offer a personalized route through a store based on a digital shopping list.
• Robotics—Mourão and Baggaley both emphasized that automation in warehouses is not binary like fully autonomous stores, but can be incrementally adopted. Baggaley noted that it can be challenging to integrate robotics into existing business processes and link robots up to other technology stacks; Ahold’s strategy is to test robotics in regional banners and share learnings groupwide. To this end, the company is soon launching a new AutoStore-powered site in the Netherlands after working with AutoStore, a robotics company, in the US. Sonae MC has trialed both AR and automated warehouse forklifts, but Mourão stated the latter’s efficiency did not compensate for the investment needed. Mourão noted that retailers should try different combinations of tools to see what works for them.

The ”New Grocery Technologies Worth the Hype” session
Source: Shoptalk Europe

Organizational Changes: Obtaining a Modern, High-Quality Workforce

During the “Transforming the Store Workforce with New Roles and Capabilities” panel, members used a live polling system to interact with the audience. When asked, “How much has your company’s approach to hiring and managing more staff changed in the past three years,” 70% of the audience stated that their company’s approach had “changed a lot.” Isabelle Aberman, Global Retail Director at Camper, a shoe brand, stated that to enhance its hiring process, the company needed to create a safe space where employees felt engaged and part of something “bigger.” Jasmin Mathäss, VP of Tech Efficiency and HR at Hornbach Baumarkt AG, a German home-improvement chain, agreed with Aberman’s assessment. He stated that Hornbach’s low employee turnover rate is, in part, due to employees “feel[ing] like they are part of a family even though [it] is a public company.”

Live poll conducted during the “Transforming the Store Workforce with New Roles and Capabilities” session
Source: Coresight Research

Panel members also asked the audience about their biggest priorities for frontline store employees, with 39% of the audience stating that “training and development” was most important. Both Aberman and Mathäss agreed that training and career goals are essential in creating a strong, happy team—increased efficiency means staff spends less time on unpleasant tasks and more time on the work they want to do. At Camper, specifically, the company has developed a strong training program that allows employees to see their careers, helping foster long-term relationships with its employees.

Aberman during the “Transforming the Store Workforce with New Roles and Capabilities” panel
Source: Shoptalk Europe

As Miller stated in the “Zeitgeist” session, “frontline workers power the industry.” Currently, many companies are realizing the challenges of maintaining a high-quality frontline workforce. While unemployment rates in the European Union are at a decade low, the job vacancy rate is near a decade high and wage inflation has increased.

To address this labor gap, some companies are automating manual tasks with technologies such as RFID and robotics, as previously discussed. However, as Miller discussed, this can create tension between “attracting and retaining the frontline workforce [a business] need[s], while also transforming their roles to deliver the future needs of [the] business.” To lessen this tension, Miller recommended three solutions:

1. Create more flexible hiring and development processes—Companies who want to compete and attract high-quality talent must keep their employees happy and engaged by increasingly adopting new, flexible models. For example, some companies use technologies to allow employees to schedule their tasks, while others are changing their training programs to “enhance flexibility, engagement and improve productivity.”
2. Adopt better information sources—Mobile apps and RFID systems can help store associates recommend products, know what is in stock and personalize the shopping experience. For instance, at Best Buy, the company uses an app called “Solution Sidekick,” which provides store associates with real-time customer profile and engagement data, stock levels and product recommendations when something is out of stock. These types of tools create a better customer service experience and enable continuous shopping experiences.
3. Create new roles and opportunities—Technology and a seamless shopping experience can also help create new roles and opportunities for frontline workers. In one example, Miller discussed how video-enhanced shopping can provide engaging workers a chance to share their passion and knowledge with new consumers.

The “Zeitgeist” session
Source: Shoptalk Europe