In order to support one of Europe's key economic sectors, the European Commission has drafted a series of practical and effective best practices and recommendations to help member states formulate their retail policy.
Nearly one in ten people works in the retail sector, which comprises more than 3.6 million companies. Retail generates 4.5% of the EU economy's added value, and absorbs up to one third of household budgets. It is an important source of economic vitality and a leading employer, but retail is experiencing tough times. Between the power grab by large store brands and the expansion of digitisation (via e-commerce), competition is rampant for small retailers. Yet the potential of the sector remains huge for retailers who manage to embrace change, especially with regard to evolutions in consumer behaviour and the way products are bought (and sold). This is a vital test for the fabric of the EU economy and its labour market.
A guide for national authorities
The EU appears to have grasped this, since the Commission has just published a best practices guide to modernising and revitalising retail. "Facing the future" contains advice and success stories and is designed to be instructive. Its primary function is to provide help and support to local and regional authorities in member states, enabling them to implement measures promoting innovation, productivity and competitiveness in the retail sector. They can then create a favourable climate for their SMEs (often very small, family firms) to continue to grow by seizing the opportunities of today, especially those offered by technology.
Progress needed in a range of areas
The Commission has identified three major aspects of retail where member states can make progress in this regard. Firstly, it wants the creation of retail outlets to be made easier, especially by reducing undue or disproportionate charges and by simplifying the procedures involved. Secondly, EU countries are encouraged to alleviate restrictions associated with the day-to-day operation of stores. These concern the promotion of sales and discounts, own sales channels, opening hours, specific retail taxes, carrying out transactions within the EU, etc. Finally, the Commission is urging member states to adopt innovative solutions to support the vitality of city centres.
One guide, six measures
"Facing the future" highlights six measures that local and regional authorities should put in place to achieve this:
- Improve digital and public infrastructure, in particular in order to encourage retailers to take on board new technologies.
- Share the "right" kind of information with retail outlets, in societies where data is becoming an increasingly essential tool.
- Help to build strong communities based on working together.
- Remove the barriers to working with digital technology, to help retailers remain competitive and adapt to changes in the market. The Commission identified Digital Wallonia's "Commerce Connecté" project as an example.
- Support the development of knowledge and skills, especially with regard to new technologies and improving the customer experience.
- Provide guidance on marketing and communications to help retailers enhance their profile.
It should also be noted that the document highlights the "Shopping in Flanders" strategy put in place by the Flemish government in 2012. As a final point, the guide suggests a method for assessing the current national situation in the sector, and a process for evaluating the impact of measures in place.
To find out more, read the "Facing the future" guide.
Why retail needs to invest in grocers
In the UK, Tesco has got its hands on a chain of small independent retailers. The small shop is being reincarnated due to more spread-out consumer behaviour.
The convenience store market has attracted greater attention since the announcement of the acquisition by Tesco of the Booker chain in the United Kingdom for EUR 4.4 billion. This transaction should enable Tesco, which is beset by strong competition from other supermarkets, to diversify and become a big player in distribution to both private individuals and businesses.
Announced at the end of January, this acquisition should take effect in late 2017 or early 2018. The reasons that lead Tesco to Booker are clear: the group already represents 30% of the British grocery market and this share could increase by 2 or 3% once the acquisition has been validated by the shareholders.
This represents a shock wave in the UK. 80% of the 41,000 convenience stores in the UK were previously fully independent, or part of purchasing groups such as Costcutter and Nisa. These groups continue to play a big role on the local market, holding a substantial share of the food market: EUR 44 billion out of total sales of EUR 210 billion.
The Saturday food shop is a thing of the past
According to IGD, the market share of the small grocery should see growth of 11.7% in the next five years. This growth may be surprising, but it can be explained by a change in British habits. People are moving away from doing the weekly shopping in big supermarkets and instead go shopping more often when they need to, behaviour known as 'top-up shopping.'
"Our revenues have always been satisfactory, but there is now a lot more competition on our market and our margins have really reduced over the last few years," explains Vijay Patel to the Guardian, an independent retailer since the 80s.
He confirms the trend for the small shop:
"I used to know 98% of my customers by name. Now I would say I know about 50%. I see new faces all the time, but customers are also less loyal."
Joining with Tesco should give Booker breathing room. Around a decade after Aldi and Lidl set up shop on the English market, competition has grown fierce for small retailers.
Ce qu’il faut retenir du « retail apocalypse »
À l’heure où les grands centres commerciaux américains se vident, une étude internationale nous apprend combien les attentes du client occidental ont changé. La Belgique est-elle concernée ?
C’est la fin d’une ère. Les légendaires « malls » américains ont perdu de leur superbe et voient leur fréquentation baisser trimestre après trimestre, preuve que le secteur connaît des changements systémiques. Dans la région, le commerce de détail a vu en 2017 une multiplication par 3 des faillites et on ne compte plus le nombre de locaux disponibles à la location : leur proportion est passée de 0,8 à 8,1 % cette année. En cause ? La vente en ligne et une modification profonde du comportement des clients, qui se détournent du gigantisme au profit de l’expérience et d’une forme plus humaine de commerce physique.
L’exception belge ? Pas si sûr !
Le nombre de centres commerciaux ouverts ces derniers mois - Rive Gauche à Charleroi, Dockx dans le Nord de Bruxelles, Promenade de Flandre fin 2017 – ne doit pas faire illusion. L'an dernier, les 16 plus importants centres commerciaux du Royaume ont attiré moins de visiteurs, confirme le BLSC (Conseil belgo-luxembourgeois des centres commerciaux) : 89 millions de visiteurs, soit une baisse de 3,56% (pour la 2e année consécutive). Les attentats en cause ? Trop simple. L’association admet que la fréquentation des centres commerciaux belges connaît une tendance baissière... depuis 2012. Une tendance confirmée par le gestionnaire immobilier SCMS-Ceusters (K à Coutrai, Grands Prés à Mons, Wijnegem Shopping Center) : il évoque -1,6 % de fréquentation pour le premier semestre de l'année.
Solution ? La reconversion et la modernisation, comme en témoigne Devimo, gestionnaire du Woluwe Shopping Center à Bruxelles (-2,2 % l'an dernier). Une dizaine d'enseignes vont y développer de nouveaux concepts en procédant à des aménagements et à des rénovations profondes.
Aménagements et nouveaux concepts, deux tendances fondamentales pour s'adapter. Ici aussi, l’innovation et l’exemple se développent peut-être en Silicon Valley.
Repenser le commerce comme un pop-up store
À Oakland, dans la banlieue de San Francisco, Popuphood a développé un programme destiné à aider les commerçants et artisans de la région à penser leur environnement de vente différemment, en les détournant de la logique des rayons et des emballages en carton pour repenser l'espace de vente à l'image des boutiques Etsy et des pop-up stores. Traduction : en mode organique, naturel, authentique.
« L'apocalypse n'est vraiment pas à l'ordre du jour dans le domaine des jeunes entrepreneurs créatifs. »
Sarah Filley, Popuphood
Une formule qui plaît et qui marche, à l'image de l'enseigne B8TA, implantée en Californie. Lancée par un ancien ingénieur de Nest, elle fait la part belle à l'éducation au produit pour séduire le client avec des produits innovants, dans le domaine de l'électronique. « Tout était une logique de distribution. Aujourd'hui, nous sommes passés à l'ère de l'attention et de la bienveillance », confie son fondateur, Vibhu Norby.
Votre client a besoin d’attention
L’essor des ventes en ligne n'efface tout de même pas le désir d'un point de vente et de contact physique dans le parcours d’achat, comme l'indique le dernier rapport de ShopperTrak. 51 % des sondés font aussi souvent leurs achats en boutique que l’année dernière, mais l’exigence du client a changé, fondamentalement.
> 28 % attendent un personnel mieux formé pour améliorer leur expérience en boutique. 15 % vont laisser tomber leurs achats si le vendeur connait mal le produit ;
> 28 % aimeraient que les vendeurs soient équipés de tablettes leur permettant d’amener les fonctionnalités numériques directement dans le magasin (avis, fiche technique) ;
> Les clients sont devenus multicanaux et attendent un important degré de service personnalisé : 21 % veulent du personnel plus nombreux à leur disposition pour leur offrir un service individualisé et... moins de files.
« Le plus grand défi ne réside pas seulement dans l’utilisation des technologies pour amener toujours plus de données numériques au sein des points de vente physiques, mais aussi de combiner les connaissances statistiques avec le contact humain afin de faire du magasin un environnement unique et réellement gratifiant. »
Herve Vervoot, Directeur régional France/Benelux de ShopperTrak.
Conclusion : votre client attend d’une enseigne qu’elle épouse la philosophie du « shop small », peu importe la taille du point de vente. Un retail à taille humaine, dans la forme… et dans le fond.
When e-commerce invests in bricks and mortar
Against all expectations, Amazon has snapped up Whole Foods in the United States. Here are five things we can take away from Amazon's acquisition of the organic supermarket chain.
EUR 12 billion
That's how much the Amazon Group spent to purchase the 460 Whole Foods stores last June. A highly symbolic move – and a milestone. For the group founded by Jeff Bezos, this is its most significant purchase to date. Amazon already plays a prominent role in sectors such as bookselling, electronics and clothing. Up to now, none of its forays into the food sector have achieved the desired results. Amazon's external growth strategy has to accelerate the company's diversification.
Whole Foods, a high-end niche
The concept is a niche grocery store that specialises in organic produce (food, beauty products). The stores are primarily located in cities. Moreover, the success of Whole Foods is, by and large, limited to those states that are receptive to the idea of organic and health foods: places such as California, New York, Washington and Oregon, as well as cities like London. Although Whole Foods has grown rapidly, recording a sales growth of over 200% in 10 years, growth has continued to slow since 2015 as market competition increases. Despite yielding to Amazon's advances, John Mackey, founder of the company, will continue as CEO.
The industry is left reeling by the announcement
On 16 June, the day of the acquisition, share prices for the big conventional retail chains plummeted in New York: Target fell by 5%, with Walmart following suit; CostCo dropped by a huge 7%. It just goes to show that this upheaval is unprecedented in the history of supermarket distribution in the US, where, interestingly, the big players listed above have set the reverse process in motion (moving from brick-and-mortar stores to digital), primarily to combat the drop in traffic to their retail outlets.
Synergies between digital and retail outlets
The group is looking to learn the ropes when it comes to managing brick-and-mortar stores. At the end of 2016, Amazon launched a new concept from its Seattle headquarters: a supermarket that uses artificial intelligence technology instead of checkouts. Amazon's move into the food industry will involve diversifying into an area with new and more complex logistics: stocking and delivering these goods will involve time constraints. The Whole Foods Group is the perfect size to make this foray successful.
European chains may respond to the move
For Oddo Securities, Alexandre Bompard's move to the helm of Carrefour is a sign, pointing to the possibility of a merger between the distributor and Fnac-Darty, now a joint venture.
"These ties would put Carrefour in pole position online, far ahead of Amazon in terms of unique visitors. It would also address the problem of the reallocation of non-food spaces in hypermarkets, which remains an Achilles heel for the retail chain."
Laurence Hoffman, Oddo.
How will retail stores look in the future?
Many commentators predicted that the advent of online shopping would spell the demise of the bricks-and-mortar store.
However, physical shops are still very much alive, though the rise of e-commerce has forced them to re-think their approach.
Over the next few years, the role of the retail store is likely to be redefined, improving the way they work through the application of new technologies.
Between the growth of online shopping, the appearance of futuristic stores without sales assistants, such as Amazon Go, and the introduction of robots, it’s clear that the retail business is in a radical transition phase right now. And over the next few years there is little doubt that the shop as we know it is set to undergo a profound transformation. However, if you want to predict what’s coming in the future it’s often useful to take a look into the past.
The retail business has seen three major innovations in recent years. The expansion of the drive-through phenomenon, which originated with fast food outlets in the United States some 50 years ago, to grocery stores, saw the foundation in France over a decade ago of the pioneering Chronodrive, which enables customers to order online and then drive to the store to have their groceries packed in the car boot while they remain at the wheel. Meanwhile back in the US, Amazon set up two Amazon Fresh Pickup grocery outlets this year, with retail giant Walmart following suit in Oklahoma City. The second phenomenon has been the come-back, in opposition to the hypermarkets and ‘shopping malls’, staged by local shops where customers can make their purchases without having to take their car along and then search between endless rows of shelves. The third revolution has been the rise of online shopping, which began in the apparel and electric appliances segments but has since spread to groceries and fast-moving consumer products, as illustrated by the Amazon Fresh concept.
Re-thinking the role of the bricks-and-mortar store
Matthieu Jolly, Service & Innovation Manager at the Echangeur, an Innovation meeting-point run by BNP Paribas Personal Finance, underlines that this triple revolution has been driven by the retailers’ desire to adapt to the changing expectations of their customers, notably for greater efficiency. “The customer wants to save time,” he points out, adding: “However, this new reality raises a fundamental question: if nowadays the customer wants to spend as little time as possible inside shops, what are the shops going to do about it?” Does that mean they’ll simply disappear? Jolly argues instead that sales outlets will have to introduce new formats and take an approach that goes beyond the purely utilitarian, with three main areas for improvement. “The first is about turning the shop into a venue for new experiences, a place where you can be amazed, where you can have a good time,” he says. This might well mean giving customers greater freedom. For instance, the Nike store in the SoHo neighbourhood of New York City offers customers the chance to try out its gear in realistic situations, shooting a few basketball hoops or going into a full sprint. Similarly, US store Pitch, which specialises in luxury furniture and appliances, everything in the shop can be tested out – for example taking a shower or drying your hair on the premises.
Another option involves using Virtual Reality (VR) and Augmented Reality (AR) technologies. Given that the cost of these technologies is still rather high for the general public, brands will be able to vaunt their dramatic effect, offering customers a truly immersive experience. For instance, during a promotional campaign in Autumn 2015, The North Face store in Seoul, South Korea rolled out an initiative whereby it invited customers to sit on a dog sled, put on an Oculus Rift headset and experience for a few moments the life of a ‘musher’, being pulled through a snowy landscape by huskies. In the meantime, a sales assistant attached real live huskies to the sled, and when the customer took off the headset the dogs took off on a real race through the store. Similarly, in November 2016, Chinese e-commerce giant Alibaba invited its customers to put on a VR headset and be teleported to Macy’s store in New York. This kind of dramatic spectacle gives stores a ‘raison d’être’, creating a meeting-point where you can have new, fun experiences. “We’re moving from a transactional mode to an approach based on experiences,” explains Nicolas Diacono, Digital Project Manager at the BNP Paribas Personal Finance Echangeur.
A place for interaction and socialising
The second area for improvement actually goes in the opposite direction, concentrating on what is unique about shopping in a bricks-and-mortar store – i.e. the material aspect, the customer’s ability to see and touch. “A store is also a place where you go to get hands-on contact with a product, to feel how it works,” Jolly underlines. He does not think that the general public has yet been entirely won over by e-commerce. Retail stores therefore still have a strong hand to play if they focus on their specific features. The recently-announced partnership between US startup Casper and nationwide discount retailer Target is a telling move. The hypermarket chain has invested $75 million in Casper, a high-end, exclusively online, direct-to-consumer mattress business. As a result of Target’s financial injection, Casper’s mattresses can now also be bought at Target hypermarkets. Despite enjoying fast growth, Casper has struggled to attract buyers beyond a rather select circle of people who are happy to buy expensive items online without first trying them out. Partnering with Target opens the door to a wider potential clientele, while Target benefits from having attractive products at its premises. Customers like to try them out in-store, and they now have a reason to go to the Target store to do so. Similarly, French home appliance and multi-media store Boulanger is setting up areas within its stores where customers can try out all its products.
The third area for development is turning the store into a place for interaction and socialising. “Many people go shopping as a way of getting out of the house. Shopping malls in the United States are now widely used as a place where young people can meet up,” points out Matthieu Jolly. Amazon showed that it has fully understood this phenomenon when it acquired natural and organic food company Whole Foods Market, a brand known for its community feel and its pleasant stores where people enjoy walking around, up and down the aisles.
“However, making customers feel welcome isn’t enough, you also have to teach them something", argues Jolly. Carrefour’s store in Villiers en Bière, in the Greater Paris region, now offers classes in cooking, wine-making and make-up.
Meanwhile French postal service La Poste provides premises for would-be drivers to take the written part of their driving test, and other companies are setting up co-working facilities.
The Virgin Megastore in London has combined these three trends. Customers are hailed in the street by a hologram of Richard Branson, and then welcomed inside the stores by hostesses. They can then go downstairs where they’ll find a bar, a café, a piano, a relaxing space with armchairs, TV screens, and even a real-life Virgin Atlantic business premium cabin where they can watch the sky go by through the porthole windows. Children can play on the consoles at the video games space. You can even rent part of the premises for events, and every Friday evening a film is screened.
More efficient, better-managed stores
The store of the future will therefore play a different role from the one we know today and will moreover provide customers with a more efficient shopping experience. In the medium term, there will no doubt be many AR-based experiences on offer. Using a future version of Google Glass or the Oculus headset, tomorrow’s consumers will be able to navigate around the supermarket aisles and see the products they are interested in highlighted in front of them. These might be food items corresponding to a diet – vegetarian, gluten-free, stone-age diet, and so on – or the products they need for a cooking recipe, suggested by their personalised virtual assistant, depending on what they already have in their connected refrigerator. Also highlighted might be the wines that go well with the dish a customer intends to cook. “We’re entering the era of ambient shopping, where everything will be interactive,” predicts Nicolas Diacono, who sees the advent of this technology in ten to fifteen years’ time.
Yet another area for potential improvement is the checkout process. “The checkout queue remains today the least enjoyable part of the in-store experience. Streamlining this process, reinventing the payment procedure, will be one of the most important innovations,” stresses Nicolas Diacono. This means allowing customers to leave the shop without first having to go through the checkout. The items in their trolley would be recognised and tallied up on the customer’s smartphone app. Says Diacono: “This is for instance what Amazon is aiming for with Amazon Go, but the technology isn’t yet sufficiently mature. The costs are still too significant for this to be a profitable approach for a shop.” So the right system still needs to be developed. Explains Matthieu Jolly: “There already exists a technology that enables a retailer to automatically recognise the items in your basket when you pass the checkout – RFID, which is used by for example Nespresso. So it’s technically feasible to scan your selected articles, pay with your smartphone and leave the shop. However, for this to work, all the products on sale would need to be fitted with an RFID chip, which is still far too expensive for all the items purchased at a grocery outlet.”
Lastly, the store of the future will be optimally organised through the use of advanced technologies. It will be equipped with robots set up to answer basic questions – this is what Pepper does already – or to direct customers to the products they are looking for, while human sales assistants focus on giving more sophisticated advice and on building the customer relationship. Robots will also no doubt have a role to play at the store’s warehouses. Supplying and restocking will be made easier through the use of AI and image recognition technology. As they move along the shelves, robots will be able to scan products and identify those that are out of stock, a task that could equally be carried out by connected trolleys equipped with cameras. Overall, sophisticated data management will enable retailers to get a better grip on what lies ahead. Nicolas Diacono foresees: “The store will be optimised by drawing on a threefold data input based on the customer’s needs, the environment – i.e. the weather, events that are taking place in the town, etc. – and the store itself. They will thus be able to make more accurate stock forecasts, taking into consideration seasonal factors, and will therefore be more efficient at restocking. A Decathlon store would for example be able to predict three or four days in advance how many bicycles it will sell during the coming weekend.”. So at the end of the day, this well-established social institution that we know as a ‘retail store’ still appears to have a bright future.