Retail trends 2018: What our experts tell you

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We spoke to a few of our retail leaders for their perspectives on what lies in store

With 2018 promising continued disruption in retail, we spoke to a few of our retail leaders for their perspectives on what lies in store:


Sudip Gupta, UK Head of Retail
Sudip Gupta, UK Head of Retail
Simon Butler, Head of Retail Supply Chain
Simon Butler, Head of Retail Supply Chain
Susan Davies, Head of Consumer Products Supply Chain
Susan Davies, Head of Consumer Products Supply Chain
Susan Davies, Head of Consumer Products Supply Chain
Bhavesh Unadkat, Customer Engagement and Loyalty specialist
Mark Ruston, Supply Chain specialists
Mark Ruston, Supply Chain specialist
Simon Mardle, Supply Chain specialists
Simon Mardle, Supply Chain specialist
Michael Wong, Retail Systems specialists
Michael Wong, Retail Systems specialist
Melissa Davison, Stores specialist
Melissa Davison, Stores specialist
















What will be the biggest challenge for retailers in 2018?

Simon B: The mood music for retailers in 2018 is sombre – cost price inflation, National Living Wage, Apprenticeship Levy and business rates will all hammer the bottom line for retailers, while consumer confidence and continued challenge from recent market entrants does nothing for the top line. In this environment, managing cost will be the main challenge in 2018.

Susan: It’s hard to ignore costs. Building on this, retailers will find growth difficult as many still don’t know what their strategic response to the likes of Amazon and Aldi will be. Many retailers are still working out their own identity in the new marketplace. The cost of not differentiating will bite.

Sudip: Differentiation will be key in the battle for customer mindspace – to protect yourself you’ve got to create loyalty in customers, and standing out in the mind of your customers is as important as it is hard.


What’s the big question retailers will be challenging in 2018?

Bhavesh: In such a squeezed environment, innovation will be key to thriving. How will retailers innovate to keep costs down while keep up with customer evolution / expectations?

Mark and Simon: Cost for us. In such a resource intensive business, the key will be productivity in areas like the supply chain and stores. How can retailers use innovation (tech, ways of working) to do more with less and help with headroom in the cashflow? That’s increasingly important considering the corporate debt some retailers currently carry.

Simon B: Managing costs will be indeed key, so I expect to see many retailers go at this as retailers do – aggressively. Whether this be range, labour, etc. The question will be, once I’ve achieved all my savings, what’s the customer proposition I’m left with – have I got a sustainable business model?

Susan: Looking past cost, and continuing on the idea of differentiation, retailers will be looking at personalisation. How can I do this effectively on a big scale, and at a good price point? Marketing will continue the journey it’s been on for a while here, but service, operations and product will need to follow to create that differentiated experience that will give a brand an identity.

Sudip: How should I invest in my store estate? Since retailers have moved away from opening new stores, the question is much should be invested in existing stores, which drives the brand image but ties up capital for years. This will involve opportunity costs in investing in other channels – a big decision!


What KPIs will come into focus in 2018?

Michael: Cost to serve will grow in prominence, competing with margin as a good yardstick for profitability. There’s so much cost now involved after the product has been sourced by a retailer, all driven by c&c / delivery fulfilment models, that this will become more significant about the profitability of a product line.

Sudip: I’ll be looking at the growth ecommerce revenue as a percentage of total revenue as an indicator of the health and sustainability of retailers. Those who can grow sales overall, while growing the ecommerce share of that, will be managing shifting customer behaviour well.

Mark and Simon: We’re going to go with cost, but with a view on the CSR KPI’s. How can retailers drive efficiency but do it in a way that is in tune with growing focus on being a responsible company (whether that be emissions in the supply chain, concerns over packaging and waste, food miles, the gig economy, etc).

Bhavesh: Employee metrics, such as retention, motivation and capability will come into focus. As retailers do more with less, and some of the tech innovation frees up time for staff to spend with customers, it’ll be key employees that are willing and able to leave a lasting impression on customers. Apple is a good example of a business who takes this seriously – it is thought to have spent as much on employee transformation in 2016 as on customer transformation.


Breakthrough tech in retail?

Simon B: AI will be making a big splash in retail (I’m thinking in some back office areas like ranging and managing processes like allocations). However, this relies on good quality data, and retailers tend to have quantity over quality.

Susan: Blockchain promises much, in payment, contractual and rebate management, and provenance / traceability – but 2018 will be proofs of concept as everyone is getting their head around it.

Bhavesh: I can see retailers experimenting with AR and VR to make the store experience more immersive and to put some theatre back into stores.


Tech that will come of age in 2018?

Melissa: Automation will start to go mainstream. I’m not quite talking robots in aisles, but back office tasks in stores which are still quite manual and often involve dual keying will be automated.

Simon B: Also have to go with automation, but will be bitesized and focused on in-year benefit to give retailers confidence it’s a tech worth investing in (and to help the 2018 number crunch).

Michael: I can see automation too, perhaps as providing some interim cost-saving during multi-year transformation programmes. Retailers are increasingly wary of these (with many big systems replacements stalling, overrunning on time and cost) and so automation could provide some short-term benefit. Can I also mention alternative payment methods? I’m thinking more Apple / Amazon pay, rather than bitcoin…


What won’t live up to the hype?

Simon B: Drones.

Sudip: Drones.

Michael: Drones.

Mark and Simon: Drones – but customer facing! There’s a couple of good uses for them in managing inventory in large depots…for us it’s ‘Amazon Go’ models – the combination of tech and systems ( mobile wallets, IoT devices, smart sensors) means it’ll still be a tantalising proof of concept come December 2018.


Which retailers will you be watching in 2018?

Susan: We’re seeing the big consumer products companies enter the direct to consumer fray – that’s going to be fascinating to see how that pans out. What impact will they make on customers, and what will be the response of traditional retailers?

Bhavesh: In the same vein, I’ll be looking at those who challenge retailers through new business models. Firms like Deliveroo are bringing in a service offering which distort the traditional boundaries of sectors, as do subscription model companies like Cornerstone. These will have an outsized impact on the future of the market.

Mark and Simon: We’ll be watching to see how some of 2017’s deals deliver on quite big price tags. Tesco / Booker, Argos / JS and Amazon / Wholefoods are all substantial outlays – what companies will emerge from the tie-ups?


On the topic of mergers and acquisitions, after a busy 2017, do you expect more activity in 2018?

Simon B: I’m not sure we’ll see consolidation – if you’ve got 200 stores today, do you really want to buy a retailer who also has a big store estate? I can see mergers between complimentary channels, or someone like ASOS hoovering up smaller pure players like Missguided.

Susan: Perhaps not mergers, but certainly end-to-end collaboration (source suppliers, consumer products companies, retailers) to find value.

Sudip: There’s a lot of corporate debt in retail currently, so I can see private equity entering and stores closing. With this, we could see some consolidation and potential portfolio development quite selectively across locations, channels and categories

Michael: Portfolio development could be a real opportunity. Department stores continue to look extremely hard to manage – could these, or elements of these, be a target?

Mark and Simon: Definitely more activity – there’s a lot of bulking up to do against the likes of Amazon. The question whether it’s safer to diversify (JS / Argos) or go deeper and more authoritative in your core (which the Tesco / Booker deal is closer to).


Finally, what will we see retailers looking for help with in 2018?

Melissa: How to apply innovation in a real world application – stores – and move beyond the paralysis of so much tech on offer. Rather than tech looking for a problem to solve, it will be how to be innovative to solve practical problems in stores (shrink, availability, raising productivity in replenishment).

Simon B: Analytics, and how to spend less time gathering data and more time acting on it. Retailers will be looking how to take analytics out of the customer and marketing domain, and apply it to stores, the supply chain, the employee and so on.

Susan: I’d also go with analytics, with really using store data to drive improvements in cost and store experience as the prize. Retailers will also want to work out how to go beyond hyperpersonalised content for customers (which can put a lot of pressure on customers to make choices and feed in preferences), and more towards tools and techniques that make it easier for customers to get what they want.

Bhavesh: How to apply innovation is the big one. There’s a very vibrant retail startup scene that many retailers are linked in with, but applying all that clever thinking and innovation and turning in to something valuable is a challenge.



Nick Hoenig Nick Hoenig

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