Introduction

Coresight Research is an official research partner of Shoptalk Europe 2024, taking place during June 3–5 in Barcelona, Spain. Shoptalk Europe is an annual conference that unites retail and e-commerce professionals to discuss the latest trends, innovations and challenges in the retail industry.

This year, the conference covers five major themes in retail: employing AI (artificial intelligence) to transform your business, harnessing brand power and building brand trust, creating unified retail experiences, next-generation demand creation, and navigating changing industry relationships.

We present key insights from day one of the event, with highlights covering the growing influence of AI, the importance of satisfying shopping experiences, the expanding definition of “convenience” in the rapid delivery space, and services spending in Europe, among other topics.

• Read our separate report on the Startup Pitch competition, which also took place on day one of Shoptalk Europe 2024.

Shoptalk Europe 2024 Day One: Coresight Research Insights

1. Employing AI To Transform Your Business

By embracing AI, as well as other emerging technologies, companies from across the retail space can foster more engaging customer interactions, unlock novel business opportunities and accelerate their operations, ultimately leading to enhanced efficiency and cost savings.

During the “Delivering Consistent Cross-Channel Experiences” session on the first day of Shoptalk Europe 2024, panelists discussed the importance of leveraging various emerging technologies, including AI, to enhance the customer experience. Perhaps most importantly, AI can analyze data significantly faster than humans; to this end, Marc Vicente Sala, Group Digital Director at Kingfisher, emphasized the importance of data collection, citing the importance of both collecting and organizing accurate customer data. Sala also took a moment to highlight the importance of implementing digital capabilities in-store, citing customer attribution and data organization as key areas Kingfisher is currently focusing on. In the same session, Arianne Parisi, Global Chief Digital Officer at JD Group, discussed the success the company has seen by empowering store associates with technology to deliver better customer experiences. Regardless of what technology a company chooses to employ, Parisi drove home the point that “the customer should be at the heart of all decisions.”

Later in the day, Stijn Demeersseman, Chief of Staff at Amazon Fashion Europe, discussed how the company is using AI to improve the customer shopping experience. According to Demeersseman, Amazon Fashion’s use of AI and large language models (LLMs) provides a host of benefits, including detailed customer review analysis and real-time size recommendations that are informed by brand-specific insights and customer preferences. “We keep a close eye on what the customer tells us and look for customer feedback at a very early stage” when implementing any new technology, he explained.

Additionally, in the keynote “Winning in the Evolving European Grocery Market,” Giorgio Busnelli, Vice President of Consumer Goods Europe at Amazon, revealed three ways in which Amazon is currently using generative AI (GenAI):

• Enhancing its natural language search abilities (via a program called Rufus)
• Improving its product cataloging processes (via a program called Starfish)
• Summarizing customer reviews

Busnelli discussing Amazon’s use of AI
Source: Shoptalk

 

• AI was also a key component for many startups that participated in this year’s Startup Pitch competition, which also took place on day one of Shoptalk Europe 2024.

2. Harnessing Brand Power and Building Brand Trust

In the “Meeting Consumer Expectations: Balancing Between Convenience and Value” session, panelists discussed how companies can build loyalty by prioritizing the right investments, focusing on doing a few things very well and delivering value to customers through improved packaging and supply chain efficiency. By focusing on excelling at a few offerings or initiatives, companies can build trust as customers will come to rely on them for specific offerings. As such, each initiative should have specific key performance indicators (KPIs) to measure their impact on customer stickiness; this is especially true of digital initiatives, according to Sara Sjöberg, Head of Marketing and Digital Sales for South Europe at H&M. “It’s super easy to get derailed by shiny, fancy new tech, that sounds super cool,” she explained. “But if it doesn’t sell for a customer in the end, it will not be a value to the business nor to the customer.”

On a similar note, Roger Graell Sole, Chief Digital Officer at Bata, took time to explain how critical it is to define what a service or investment actually aims to do so that a company can measure its impact effectively. According to Sole, currently, Bata is focused on improving its packaging and delivery experience by removing items and steps that frustrate customers, such as extra outer packaging.

Throughout the session, all panelists agreed that retailers must prioritize creativity, curation and innovation when attempting to optimize the customer experience and, as a result, build loyalty.

• Creativity is key to cutting through the noise and delivering unique, branded experiences.
• Curation is essential for consistent surprise and delight.
• When implementing innovation, balancing value and convenience is crucial, and investments in innovations that bring customers back time and time again should be prioritized.

By prioritizing these elements, retailers can create a memorable and satisfying shopping experience that sets them apart from the competition. For instance, Sjöberg stated that H&M aims to delight customers and build loyalty via unique in-store experiences, such as LEGO play areas, meet-and-greet events with local artists, designer collaborations and curated collections.

The “Meeting Consumer Expectations: Balancing Between Convenience and Value” session, from left to right: Sjöberg; Sole; Demeersseman; and the session interviewer, Jennifer Berry, CEO of Digitas UK
Source: Shoptalk

 

3. Creating Unified Retail Experiences

In the evolving retail landscape—where customers effortlessly transition between brick-and-mortar stores and online platforms to shop—companies must strive to craft a cohesive, “unified” shopping experience. On day one of Shoptalk Europe 2024, in separate sessions, we heard from food delivery companies Deliveroo and Wolt about their retail activities across their online and offline stores.

Miki Kuusi, Head of International at DoorDash and CEO at Wolt, discussed the “pull” effect in the development of new channels, noting that e-commerce is at different stages in different countries partly due to high-quality players “creating the market;” he argued that a similar effect can currently be seen in the rapid delivery space. Kuusi also revealed that some 85%–90% of Wolt sales are incremental to the third-party stores that serve its retail orders. He stated that Wolt brings new technology to these small retailers that, prior to working with Wolt, often lack technical capabilities—the company’s dark-store technology helps these brick-and-mortar stores better understand their inventory and purchases.

On a similar note, Suzy McClintock, VP of Grocery, Hop, Editions and Retail at Deliveroo, stated that her company helps create product solutions for its third-party partner retailers that provide a host of benefits, including savings that are passed on to consumers. For example, Deliveroo launched a “picking app” last year, which can reduce grocery picking times by 20%, according to McClintock. She also discussed the significant opportunities for upselling in the rapid delivery space and how the company is activating incremental shopping missions through the shopper-behavior data it has collected.

Across both sessions, a common theme emerged: convenience in rapid delivery services is not just about which company provides the shortest possible delivery time. McClintock explained that access to retailers that consumers can not easily access otherwise is also important; in fact, she stated that some consumers are prepared to wait slightly longer and pay for such convenience. While Kuusi acknowledged that conversion rates do start to drop off when delivery times go above 45 minutes, he stated that accuracy is more important than speed. As such, Wolt has moved away from optimizing for speed and toward optimizing for accuracy. McClintock made a similar remark, stating that “perfect execution is paramount.”

McClintock speaking on the current state of the rapid delivery landscape
Source: Shoptalk

 

During the “Delivering Consistent Cross-Channel Experiences” session, panelists also discussed the importance of creating a unified mission and vision across multiple brands, geographies and channels. Specifically, Sala of Kingfisher discussed how the company has successfully built an online marketplace that connects with their physical stores. This means that customers can return third-party sellers’ products to a Kingfisher store, facilitating easy returns. Additionally, according to Sala, Kingfisher stores fulfill close to 90% of the company’s online orders. In the same session, Parisi of JD Group noted that incentivizing store associates to deliver an omnichannel experience is critical for success in the current retail environment.

4. Next-Generation Demand Creation

In the session “Services, Circularity, and Beyond: How Currys is Reinventing Itself for Tomorrow’s Consumer,” Alex Baldock, Group CEO at Currys, emphasized that a services offering can create a more secure and lucrative business in specification-purchase categories where comparison shopping drives lower prices and margins, such as the electronics category. Baldock noted that electronics are expensive purchases that customers often need help completing, especially in regard to financing and product set-up. When discussing repair and refurbishment services, Baldock noted that purpose (sustainability and circularity) and profit go hand in hand, revealing that Currys “make[s] more money” selling a refurbished iPhone than a new one. He also stated that, when it comes to relatively infrequently purchased categories, services can be loyalty drivers, as credit and care-and-repair customers have proved “stickier” than the average Currys shopper.

In most European countries, GDP is growing, and wage growth is outpacing inflation, meaning purchasing power is rising; moreover, strong labor markets are giving consumers greater willingness to spend. Within this context, Natalia Lechmanova, Chief Economist, Europe, at Mastercard, also discussed spending on services, noting that, in 2023, consumers grew their services spending (especially their travel spending); in 2024, while retail is improving— home-related sectors are seeing improved trajectories and grocery volumes are beginning to pick up—spending on services, such as dining out, remains strong. Looking forward, as European consumers’ purchasing power improves, they are likely to deploy more spending toward retail purchases, including home goods, according to Lechmanova. Overall, European retail looks primed to see less price sensitivity and improved volumes.

A common theme among the sessions of day one of Shoptalk Europe 2024 was just how much the retail landscape has changed, revealing the need for next-generation demand creation. It is “astonishing how fast everything moves,” Lars-Johan Jarnheimer, Chairman at INGKA Holding B.V. (IKEA), remarked during a keynote presentation, noting that the biggest change in recent years has been the speed of change. He believes that the agility to respond to change goes hand in hand with simplicity in an organization. At IKEA, each country in the chain is free to make its own decisions—as those decisions need to be made as close to the customer as possible—with the company aiming to keep central bureaucracy low, enabling agility.

Jarnheimer also noted that IKEA has adapted to changes in consumer behavior by opening smaller, urban stores. While Jarnheimer shared that the profitability was “not that good” at some of these locations on a single-store level, he also stated that these small formats increase penetration across multiple channels, providing further evidence of the “halo effect,” where physical stores boost digital revenues in catchment areas.

Jarnheimer (left) with the panel interviewer, Sarah Engel, President at January Digital (right)
Source: Shoptalk

 

Determining how best to generate demand and loyalty is a consistent retail challenge. In the session “New Industry Research: Economic and Consumer Trends Shaping Grocery,” Javier Camino, Global Futures Planning Director at Diageo, discussed how the company has created a “foresight” model to consider what is possible, probable and preferable over the long term (the next 10 years). Its model uses social listening to strengthen its understanding of current and future trends and, on the back of that understanding, create new products. Such trends include “betterment brands” (resulting in eco-friendly spirits bottles), “expanded reality” (leading to a digital tool to help shoppers choose a whiskey) and “conscious wellbeing” (Diageo recently pushed into the alcohol-free beverage space). When considering what will work best in the future, Camino recommended that brands and retailers overlay science to imagine what is possible.

5. Navigating Changing Industry Relationships

Retail media networks, business-to-business partnerships and retailer technology commercialization are just some of the change agents influencing retail’s key industry relationships, blurring traditional lines of a European retail market where roles are no longer so clearly defined.

Adgild Hop, Partner and European Retail Market Leader at Deloitte, discussed how grocery retailers’ margins are eroding amid higher labor costs and interest rates. Meanwhile, retail media offers a 75%–85% net profit margin and only takes a small proportional contribution to move the needle for a grocery retailer’s bottom line. Hop argued that, ultimately, grocery retailers will look to become media and technology companies that are enabled by grocery—and the data it provides—boosting not only their margins, but also their valuations.

• By 2028, retail media will be a £7.3 billion ($9.1 billion) opportunity in the UK alone, according to Coresight Research projections. Coresight Research also estimates that retailers can generate 0.1%–1.0% of total sales in alternative revenue from media and shopper insights.

Hop speaking about the retail media opportunity in the grocery sector
Source: Shoptalk

 

Busnelli of Amazon also discussed the evolving grocery industry, stating that Amazon aims to provide its customers with the best grocery experience possible. To this end, in grocery categories, Amazon is finetuning an “Everyday Essentials” strategy based around three pillars:

• Convenience—Amazon has reduced delivery times by spreading inventory closer to customers and scaling up its same-day facilities. Amazon’s “north star” for its Everyday Essentials strategy is making ordering quicker and simpler; to this end, in 2023, it added an “add-to-cart from search” feature. While this may only save consumers one click, it is “huge for customers” and for Amazon, driving volumes and larger baskets, according to Busnelli.
• Pricing—The company’s Everyday Essentials strategy is focused on offering everyday low prices on a wide variety of items that consumers buy often, which Busnelli defined as three to four times a week.
• Selection—Amazon has focused on the best-selling products and variants—those that are most sold in 90% of physical supermarkets and hypermarkets. However, Busnelli also noted that Amazon’s range is one of its competitive advantages: It typically offers 30 million SKUs (stock keeping units) in this space in each market compared to the 30,000 SKUs found in a typical supermarket.

Over the years, Amazon’s approach to grocery has remained diverse, with the availability of Amazon Fresh stores, Amazon Fresh rapid delivery, Amazon Go stores, Whole Foods Market and services such as Subscribe & Save varying from region to region. When asked whether consumers will see Amazon continue to cover all those channels and formats, Busnelli replied that it is possible and that a multifaceted approach is the right way to capture opportunities. Coresight Research has long pointed to the need for a cross-channel approach from Amazon if the company wishes to capture a meaningful share of regular, full-basket grocery shopping, and we expect Amazon to continue pushing into brick-and-mortar for grocery in key territories.

What We Think

Conversations on the first day of Shoptalk Europe 2024 covered a wide variety of topics, from the future of the European grocery space and how AI is changing the retail space to how satisfying shopping experiences lead to brand loyalty.

In most European countries, GDP is growing, and wage growth is outpacing inflation, meaning purchasing power is rising; moreover, strong labor markets are giving consumers greater willingness to spend. Overall, European retail looks primed to see less price sensitivity and improved volumes. In the UK, specifically, we have pointed to 2024 as an inflection point for UK retail on the back of likely reduced interest rates, much lower inflation and an improving housing market. Amid this retail landscape, companies must prioritize creativity, curation and innovation in order to optimize the customer experience and build loyalty. By prioritizing these elements, retailers can create a memorable and satisfying shopping experience that sets them apart from the competition.

Panelists also explored the future of specific sectors. In electronics retailing, omnichannel and services have become watchwords as major legacy players seek to differentiate themselves from online-only players and maximize profits in a low-margin sector. The rapid-delivery companies we heard from were keen to promote a broader perception of convenience than simple, quick delivery, while in the grocery sector, companies discussed the importance of retail media networks and effective pricing strategies.

Implications for Brands/Retailers

• Looking forward, as European consumers’ purchasing power improves, they are likely to spend more on retail purchases, such as home goods. Overall, European retail looks primed to see less price sensitivity and improved volumes.
• According to Hop of Deloitte, grocery retailers will look to become media and technology companies that are enabled by grocery—and the data it provides—boosting not only their margins, but also their valuations.
• When implementing new programs and initiatives, companies should also look to implement specific KPIs to measure the impact of the new programs and initiatives.
• Companies need to test new experiences and technologies in an agile manner to stay future-proofed and accurately determine their impact.
• Retailers should look to empower their store associates with digital tools, such as tablets, to improve in-store customer experience.

Implications for Technology Vendors

• As more retailers look to provide their store associates with new digital tools, technology vendors can provide these tools and educate the store associates on how to use them efficiently.

Impacts from AI

• AI can provide retailers with a host of benefits, including customer review analysis, real-time size recommendations, and enhanced product cataloging. However, the customer needs to be at the heart of all technology implementation—AI should not be adopted simply because it is trending.
• If companies want AI to successfully analyze data quickly, they must organize and collect data in a clean, usable way.