Introduction

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

We present our top insights from the second day of the event.

Shoptalk Europe 2023 Day Two: Coresight Research Insights

Technology: Web3 and AI

Macroeconomic headwinds, raised expectations and heightened competition mean that strong technology investment plans will be crucial in enhancing productivity, improving experiences and driving growth.

Web3 and the Retail Landscape

Deborah Weinswig, CEO and Founder of Coresight Research, took to the stage for the “Web3 and the Supply Chain: Blockchain, Digital Twins and More” session to present on how Web3 (sometimes styled Web 3 or Web 3.0) can help brands and retailers across their supply chains. Coresight Research has been involved in supply chains for many years: first as part of the world’s largest supply chain company, Li & Fung, and then as a partner following our spin-out in 2018. We first envisioned a modern, connected supply chain in 2019. Since then, our coverage of the topic has continued, including research on how emerging technologies can help optimize companies’ supply chains.

Weinswig discusses how Web3 can create optimal supply chains
Source: Coresight Research

 

Retailers face several challenges and limitations in managing their supply chains. Web3 technology can help boost supply chain traceability, transparency, intelligence and automation, helping to mitigate those challenges. As Weinswig explained, there are many benefits to using intelligent, connected supply chains, including:

• Better demand forecasting
• Faster product design and on-demand manufacturing, as well as consumer-to-manufacturer abilities
• Greater traceability, compliance and circularity
• Enhanced labor efficiencies and cost savings
• Increased last-mile speed

During the presentation, Weinswig introduced a framework for adding Web3 to supply chains, allowing companies to add end-to-end visibility, automation and cost savings. With this framework, and through smart contracts and decentralized ledgers, brands and retailers can enjoy a host of benefits, as seen in the image below.

The impacts of Web3 on supply chains
Source: Coresight Research

 

Weinswig remarked on what could be holding retailers back from utilizing Web3 in their supply chains, such as their software not being Web3-compatible and the innovator landscape remaining in its infancy. She also highlighted the recent lack of transparency across the disrupted global supply chain, with components and products still sitting in containers and factories, and supply chain projects remain a difficult topic. “There are disconnected systems and no consistency of data,” she said.

Demonstrating that sustainability is top of mind at Shoptalk Europe and in retail today generally, Weinswig highlighted sustainability as a key driver of change in the retail supply chain. She described effective sustainability practices in retail as “using less and saving money while you do.”

AI

Sports equipment retailer Decathlon is using AI (artificial intelligence) to support its goal of driving sustainability, according to Jérôme Dubreuil, Chief Digital Officer at the company. The company uses the technology to prompt sustainable behavior among customers, such as offering long-term bicycle rental versus a purchase. Echoing Weinswig (above), Dubreuil emphasized that “cost and carbon footprint savings go hand in hand.”

Dubreuil confirmed that AI is also enabling the company to optimize many of its business processes as it “shapes the world of sports.” AI helps provide a 360-degree view of the consumer—for example, what sports customers are involved and/or interested in—to provide personalized recommendations and help customers lead active lives. However, Decathlon is keen to keep its customers at the center when using AI, with trust and responsibility as key priorities, Dubreuil said.

Dubreuil discusses how AI provides business optimization

Source: Shoptalk Europe

 

AI can also support sales and business optimization by empowering store associates. Pierre-Yves Calloc’h, Chief Digital Officer at liqueur company Pernod Ricard, explained that one big challenge for the company is the “busy shelf,” presenting shoppers with an abundance of choice. Using cluster data from stores and strategic priorities per brand supports sales staff with recommendations, enabling them to better connect shoppers with relevant products and therefore increasing the likelihood of a sale.

In using AI in retail, Calloc’h advised that retailers “identify problems, focus on limited solutions and be bold.” He warned that companies must look to select use cases that are business- and industry-relevant.

Emerging Channels: Electric Vehicles, Quick Commerce and Retail Media

Continued macroeconomic uncertainty is driving more retailers to new and emerging channels to generate alternative revenue streams.

Electric Vehicles and the Future of Convenience Retail

A new customer segment has emerged: the EV (electric vehicle) driver. Tracey Clements, SVP CEO Europe – Mobility & Convenience at BP, told Shoptalk Europe that BP believes that forecourts of the future will be dominated by EVs. According to Clements, today, the average visit to a forecourt/gas station is three to four minutes; in future, it could be 20 minutes due to EV charging time, driving a need for cool retail offerings to attract these consumers.

EV charging stations present an opportunity for forecourt retailers, which cannot differentiate on fuel but can differentiate on experience, Clements explained. Convenience is a huge factor in enhancing any shopping experience, but to provide convenience on the forecourt, digital services are likely to come into play—for example, a consumer could select a charging bay and order coffee to have while they wait, both from the same in-car app. Retailers need to create a journey that is seamless and personalized, with relevant promotions and recommendations, Clements said. BP has already launched in-car payment in Germany.

Clements highlights EVs as a key opportunity to provide retail differentiation

Source: Shoptalk Europe

 

Another technology-powered convenience concept is quick commerce, also known as instant needs or rapid home delivery. Matt Price, General Manager at Uber Eats (UK & Ireland, Uber), said that consumer demand for quick commerce has reached such levels that “same-day delivery is the new next-day delivery.” According to Uber, 45% of consumers do not convert because delivery is too long or not transparent. Although quick commerce originated in grocery, venturing into new segments will be the next big step for the model: Price highlighted electronics, beauty and fashion as being “ripe for the change” to quick commerce. He said that merchants are increasingly embracing the model because it drives incrementality, and consumers buy more from a retailer if it offers quick commerce.

Overcoming Hurdles in Retail Media

Retail media networks (RMNs) provide brands with highly personalized targeting capabilities and an effective way to measure their advertising return on investment (ROI) and SKU (stock keeping unit) level. The desire to monetize shopper data and increase profit margins has driven many retailers to build their own RMNs or enter strategic partnerships with technology providers to set up RMNs, and Coresight Research expects more to follow suit in 2023 and beyond.

Day two at Shoptalk Europe saw further discussion on retail media, between Simon Miles, VP, Global OmniChannel Commercial Strategy, The Coca-Cola Company; Tom Langley, Head of Personalisation & Retail Media, John Lewis Partnership; and Kina Demirel, Managing Director, Mimeda (established by Turkey’s Migros Group); and was hosted by Ana Paula Guimarães, Partner, McKinsey & Company. Some discussion focused on the hurdles that retail media teams need to overcome for the industry to flourish.

• Demirel noted that, because of the impact of Amazon, many people assume that retail media means only online advertising. However, Migros started with in-store advertising many years ago—via screens, print ads and shopping trolleys—and can tell brands which stores to advertise in to reach a different consumer segment. Langley noted that in-store advertising can create tension with that space that brands expect for promotions and said that there is a gray area between “negotiated space” as part of placing a product in-store and marketing messages—for example, whether a branded promotional space in a grocery store a part of a trade agreement or media agreement.
• Miles said that various parties—brands and retailers—are “trying to figure it out” and that clarity on objectives is not evident yet. More consistency is needed in the retail media space, Miles argued, a point that Langley echoed: with around 600 retail media networks in the US, will brands want to purchase across networks or select key retailers, and companies in the space will need to make it easier to purchase across a landscape where there is currently little standardization.
• Langley pointed to issues around hiring for retail media capabilities. At John Lewis, retail media started life in the commercial teams—but buyers don’t have experience of media. Customer teams may be good at building brands but tend to be best at building their own brands rather than selling other companies’ brands. Hiring for retail media involves creating a new job family, Langley said: retailers need specialists who understand retail but act more like a media owner and operate to provide advertising and data services.

Demirel was bullish that brands and retailers “will rewrite marketing history” with retail media. Langley argued that companies should stop talking about the profit retail media can make and focus on the brilliant campaigns it can create—echoing thoughts we heard on day one of Shoptalk Europe.

The panel during the “Developing an Effective Retail Media Network Strategy” session at Shoptalk Europe

Source: Shoptalk Europe

 

Store Experience: Tech-Enabled Services and E-Commerce Integration

Creating Data-Powered “Wow” Moments To Delight Shoppers

Greater usage of online shopping in the past few years has focused minds on role of the retail store. Consumers and retailers alike are placing greater emphasis on the in-store shopping experience.

Michael Gabay, Co-Founder and CEO of Israeli technology startup Trigo, pointed to the need for “wow” moments in stores, which he believes will be one of the biggest changes to the retail experience within the next couple of years. Such moments can be created through personalization, experiential retail or services, and are likely to be increasingly powered by technology.

This means that the physical store will be more reliant on customer data. Eric Chemouny, MD of Retail and CPG Industries at Google Cloud, said that getting to know consumers as individuals is imperative for retailers to propose services and ensure that stores meet shopper demand in terms of product assortment and availability.

Anastasia Georgievskaya, Founder of CEO of Haut.AI, a SaaS (software-as-a-service) platform serving the skincare category, emphasized that “wow” moments are created when retailers think about how to make each shopper’s next purchase experience better than before, rather than focusing now on transactional relationships. She also highlighted generative AI, such as ChatGPT, as a future enabler of “wow” experiences in physical retail (we saw generative AI feature prominently during day one of Shoptalk Europe).

Enhancing the store experience through technologies such as AI has seen many retailers experiment with autonomous store concepts—and Gabay expects this trend to extend beyond the grocery sector (much like the potential expansion of quick commerce, as discussed earlier). For example, Trigo is opening stores for telecoms, he said.

The panel at the “Groundbreaking Physical Retail Technologies” session discusses in-store “wow” moments

Source: Shoptalk Europe

 

The Future of the Store

In terms of the future role of the store, Thierry Gadou, Chairman and CEO of electronic shelf labelling specialist SES-Imagotag, believes that physical stores “are the future of e-commerce,” as they will increasingly provide local fulfillment for online orders. “Local e-commerce” (fulfilling from stores) provides efficiency and sustainability benefits: “local e-commerce is low-carbon e-commerce,” Gadou said.

SES-Imagotag has already seen its customers, such as Walmart, put stores at the center of their omnichannel strategies. Local e-commerce is set to grow at a fast pace, with Gadou estimating that in the coming five to seven years, more than 50% of online orders will be delivered out of physical stores.

Gadou explains that physical stores have a key role to play in the future of e-commerce

Source: Shoptalk Europe

 

The positive view of the brick-and-mortar channel as complementary—perhaps even necessary—to the future of e-commerce is a good sign for store-dominant retailers, such as department stores, which were heavily impacted by the widespread pandemic-led shift to e-commerce.

The department store model has been challenged since mass merchants, hypermarkets and discount stores came on the retail scene in the 1960s and 1970s. In a keynote session on day two, Jean-Marc Bellaiche, CEO of French department store chain Printemps Group, explained that Covid-19 further exacerbated challenges for a sector that is reliant on tourism. Bellaiche confirmed that, unsurprisingly, the immediate priority for Printemps in the fall of 2020 was to differentiate its offerings and marketing to remain competitive amid shifting consumer demand and shopping preferences.

Printemps took action across all consumer touchpoints, “from shopping bags to dotcom,” Bellaiche said. To create a fear of missing out among consumers, the company hosted weekly events in every store, which drove traffic, created buzz and deepened shopper engagement. Bellaiche also highlighted other key differentiators for Printemps that it continues to strategize around to ensure its status as a department store for the 21st century:

• Dedication to circularity
• Adding dotcom to the store
• Moving the company to Web3
• Launching product exclusives with desirable brands
• Hosting weekly livestreaming events

Bellaiche discusses how Printemps is reinventing the department store format for the 21st century

Source: Shoptalk Europe

 

Organizational Changes: Breaking Down Silos

Retail companies recognize the need to adapt their organizational structures and practices to adapt to today’s consumer and macroeconomic environment. Clements (BP) said that traditional organizational structures in retail/consumer goods that are sometimes reflected in stores are “not going to work.” Consumers’ lives are “totally different” now to before the pandemic, she emphasized, and there is more change happening at a more rapid rate in today’s retail landscape. This drives the importance of customer foresight and insight for retailers. Clements suggests the companies look to adopt practices such as reverse mentoring; they “cannot assume they know the answer.”

Reiterating that breaking down silos within companies is necessary, Neil Reynolds, VP Global Digital Commerce at Mars Wrigley, added that it presents a huge challenge—across marketing, sales and supply. Recognizing this, Mars no longer has a CMO (chief marketing officer); it instead has a chief growth officer.