December 21, 2018

Retail pundits predict 2019 and beyond

Alexa (source: Amazon)
Alexa, tell me the future
Another twelve months, another chance, another challenge. Every December, we ask a panel of international retail experts for their take on the future of the trade. As in previous years, Lebensmittel Zeitung put the scattergun question:

"What do you see as the most significant or exciting development in retailing/fmcg manufacturing and the most important challenge for the future?"

Will these gurus continue to stress the disruption caused to the industry by the increasing digitalisation of our society? Will they despair about Brexit and a world still oppressed by domineering old men? Will they worry about the amount of (micro)-plastic in our oceans and the threat of global warming? Or will they just surprise us?

We print their answers in alphabetical order of surname...


Looking into the Seeds of Time



Dagmar Bottenbruch
, Angel Investor & Consultant, Berlin:

Dagmar Bottenbruch, angel investor & consultant (photo: Bottenbruch)
Dagmar Bottenbruch: "The word sustainability is now coming back, but filled with meaning"
"Some of the emerging trends are becoming massive…Very clearly many people are adjusting their consumption behavior, and, while the word sustainability has been massively overused in the past, it is now coming back, but filled with meaning.

Most importantly, people are re-evaluating their consumption of 'animal protein'. Not only are more and more people going 100-percent vegetarian or vegan, but more and more people are going flexitarian, i.e., significantly reducing their overall consumption of animal products with meat- or dairy-free days or weeks. Many do it to reduce animal suffering, many to reduce CO², others for their own personal health.

No surprise that there is an amazing number of truly interesting food-tech and ag-tech startups that are working on alternatives from lab-grown meat to a fully comparable 3D-printed meat replacement entirely made from plants. The Israeli startup JetEat looks extremely promising with encouraging tests for printing a steak that compares in texture and taste to a real steak, but is entirely made from plants.

Other trends: a huge focus on digestive health, personalized nutrition, carbohydrate replacement, such as pasta made from seaweed, sugar reduction, countless numbers of new snacks, also incorporating insect proteins and countless new drink alternatives with health 'claims' as well as the uninterrupted introduction of new superfoods. Who would have ever predicted the new golden age of the Brussels sprout..?

It is a true challenge for the consumer who wants to do everything right, but very clearly some of the trends are more than hot air."



Professor Joshua Bamfield
, Director, Centre for Retail Research, Norwich, UK:

Professor Joshua Bamfield, Director (photo: Centre for Retail Research)
Joshua Bamfield: "Mobile-led online retailing is old hat"
"Among the most significant developments for 2019 we expect the use of mobile computing by consumers shopping in bricks & mortar stores. Mobile-led online retailing is old hat now, but the long-awaited use of smartphones when out shopping for retailer-shopper messages, store plans, retail offers, loyalty schemes, recommendations, reserving merchandise and scan-&-go etc should build momentum in 2019 – probably.

The most important challenge facing bricks & mortar retailers in the UK is to survive and thrive another year of suicidal price-cutting, the charms of an unplanned Brexit, and their heavy operating costs, partly caused by the dependence of successive governments on tax revenues from mature store-based retail businesses."

 


Professor Utho Creusen
, Program Director DIGITAL LEADERSHIP at Management School St. Gallen, Switzerland:

Professor Utho Creusen (photo: EditarLr)
Utho Creusen: "Artificial Intelligence is going retail"
"Artificial Intelligence (AI) is going retail. Nick Bostrom's research decribes the existential risks of superintelligence. In retail we will see robots organizing our supply chain. Chatbots and human robots are the future when it comes to communicating with customers. Marketing is also on the way to utilise big data. The retail world of the future will change completely.

The consequences for retail real estate, warehousing/logistics and employee competence will be bigger and faster than anyone expects today. Surprisingly, most retail managers are completely occupied by day-to-day operations and do not even take the time to understand the conditions of digital leadership."


Linda W. Eatherton, Partner, Managing Director Global Food & Beverage, Ketchum, Chicago:

Linda W. Eatherton, Partner, Director Global Food & Nutrition, Ketchum (photo: Ketchum)
Linda W. Eatherton: "Less is more"
"2019 Retail Prediction: COMING SOON: Plastic-Free Aisles. Americans like to think they are the trend-setters for the world. But when it comes to recycling and reducing packaging waste streams, we're a bit behind our European friends who have aggressively driven new standards and achievements for decades. But, we're not far behind. Reducing waste of all sorts is a rising topic captivating conversation and stimulating new initiatives.

I predict 2019 will be the Year of Less. The 'clean food' movement, which began a couple years ago, demands that less ingredients and chemicals are used to make food. I see this trend expanding to 'more of less'. Specifically, this means less waste, less packaging, and also, most likely, very distinct calls for less plastic packaging. My observation is that images of discarded plastic packaging mountains may well become the poster child for this this 'Less is More Movement'.

Why? It's compelling and provocative. And, that's what concerned groups and individuals need in order to brew support for the changes they desire.

I have no skin in this game. As a communications counselor to leading food companies, I know quite well that every choice we make in food production AND packaging creates outcomes and consequences that will undeniably leave a portion of the population dissatisfied at best. A total removal of plastics is the kind of battle cry that carries with it equally powerful and potentially unintended consequences.

Plastic bottle washed up on the shore (photo: weixx Fotolia)
Message in a bottle
There is no doubt that we must reduce our footprint and our environmental impact. And, responsible use of plastics will be the next frontier to be conquered.

Consumers have shown us they will make judgements based on emotion and values first; facts later. Their anti-plastic sentiments are growing in social chatter. Much like similar movements in industries ranging from energy to organics, the anti-plastic movement looks to be galvanizing communities of like-minded shoppers driven by higher-values and determined to find solutions. And, today's retailers are looking for that next big opportunity to align with their shoppers' values in-store with curated offerings and featured product displays.

There is every reason to believe we may soon hear of a retailer promoting a 'plastic-free' aisle of products in the very near future. Retailers in the States are locked in a fierce fight to be relevant and are going to continue to aim for hearts over minds to win share of wallet. I predict they may see a 'plastic-free' aisle as branding or leadership opportunity to differentiate."


Dr Kay Hafner, CEO, Hafner & Cie., Digital Change And Strategy GmbH, Essen, Germany:

Dr Kay Hafner (photo: Hafner & Cie)
Kay Hafner: "Food onliners will succeed at the most in 5+ years"
"The most significant trend in retail is the generational change from old-school traders to keen onliners, who implement real multi-channel retailing with full digital options. Some traditional retailers are happy that Amazon Fresh and other food onliners are not as quick and successful as expected, but, if they don't use this extra time to digitalize all of their service areas and customer communication, they will die a few years later.

I am sure that the 'last mile' takes more efforts and excellence than expected, but the food onliners will succeed at the latest in 5+ years, because new logistic tools, self-driving lorries, drones and mobile payment options are underway. The only areas which can remain 'bricks & mortar' are concept, lifestyle and traditional small foodie stores with strong face-to-face communication with customers.

So more than ever physical retail needs clear positioning, and boring mass-merchandise or overloaded shelves and traditional flyer communication are no-gos."


Tim Harrap
, Head of Collaboration, Lye Cross Farm, Redhill, Bristol, UK:

Tim Harrap, Head of Collaboration, Lye Cross Farm (photo: Harrap)
Tim Harrap: "Trust is being destroyed"
"There is a great tussle going on between the great platform giants of the internet and the legacy retail sector. These physical retailers are trying to assuage financial pressures in the market place by mergers & acquisitions. However, they potentially find themselves purchasing more deadweight onto their balance sheet, or even come under the spotlight of the competition authorities, or both!

In the meantime, the platforms march on and cream off profits whilst not adhering to conventional wisdom in how to run a business.

Every man, woman and child seems to have a view on Blockchain technology and how wonderful the future will be. Sad that it comes about to try and deliver trust – because trust has been or is being destroyed. Talk about a Catch 22 situation!

The challenge for the future is going to be the hope and belief that people will improve cultural relations in the 21st century and break the political, financial and economic stranglehold which can so oppress the human spirit. As a digital transformation writer recently wrote, 'work hard to create a culture, not a culture war'."



Ibrahim Ibrahim
, Managing Director, Portland Design Associates Ltd, London:

Ibrahim Ibrahim, CEO Portland
Ibrahim Ibrahim: "Amazon, P&G and Unilever will acquire (more) physical retailers"
"My predictions for 2019 are:
- We will see more robotics in retail and hospitality with voice control and facial/image recognition technology;
- Amazon will acquire a large retailer in the UK. Marks & Spencer?
- Procter & Gamble and Unilever will acquire more physical retailers;
- Currently unknown Chinese brands will become household names in the West;
- Big Tech will experience tighter regulatory conditions in Europe;
- Facebook's Messenger will be demerged as a separate company and will be developed as a stand-alone 'Conversational Commerce' platform;
- Brands will become more political, see Nike's Colin Kaepernick ads and Procter & Gamble's 'the Talk' video;
- Pure-player retailers will decline, only those who have a physical presence will drive forward, see latest ASOS numbers."



Mag. Uwe W. Klenk
, CEO & Founder UK & Partners Group and GlobalSalesPlatform, London/Budapest:

Uwe W. Klenk (photo: Uwe Klenk)
Uwe W. Klenk: "Big data and machine-learning are major disrupters"
"The 21st-century customer is educated and has ample easy-access choice for any product he or she needs at any specific point in time. This makes pricing techniques irrelevant and drives retailers towards the creation of experience formats and developing meaningful marketing.

Brands in many categories will slide into commodities due to private label development.

Marketing will move from wide appeal to the broad population towards customer-centricity due to developments in big data.

Store formats will evolve from mere 'stock-the-product' concepts to entertainment and emotional hubs.

Big data and machine-learning are major technological innovations and they will disrupt the way supply chains, sales, marketing and operations evolve in both retailing and the fmcg industry."




Michael Sansolo, Retail Industry Consultant, Washington D.C.:

Michael Sansolo (photo: selfie)
Michael Sansolo: "Storm clouds are gathering in the U.S."
"It's always difficult to predict the future, especially at a moment when things seem so uncertain. But that, sadly, is the reality facing the food retailing industry in the U.S. and finding a way through this uncertainty may be painful.

The clouds are coming in many directions starting with the economy. The U.S. has been in a long, but sluggish economic recovery since the Great Recession of 2008, which has meant general improvement in all economic measures including consumer confidence. That period seems to be coming to an end as countless key indicators and worrisome signs, such as burgeoning consumer debt, suggest the world's largest economy is likely to fall into recession sometime soon.

For U.S. retailers a downturn would be especially unwelcome. The past few years have seen the emergence of non-traditional competitors starting with e-commerce giant Amazon, but also including hard discounters like Aldi and Lidl (from Germany) and home-grown threats like Dollar General. Should the economy soften, those discounters will become a much more alluring destination for shoppers, which could create price pressures unlike any the U.S. has seen before.

A Lidl store in the US (photo: Supermarket News)
Lidl joined Aldi in the U.S. last summer, making two German discounters on that side of the Pond
The threat from e-commerce seems to suggest a longer period of challenging times. Already, US consumers are being attracted to the benefits of online shopping, and increasingly traditional operators — especially Walmart and Kroger — are expanding their reach into cyberspace. The online environment offers shoppers unmatched convenience and a new kind of personalization in marketing and basket filling.

Clearly the industry will need to rise to these challenges. From the discounters — if a recession truly comes to pass — companies will need to focus hard on new areas of efficiency and probably a greater reliance on private label to lower market basket prices. And when it comes to e-commerce, those same companies will need to find a way to blend the benefits of online shopping with in-store customer experiences.

Neither path is simple, but the reality is that few other options may be available, and the industry will have to evolve to meet this challenge with the same vigor that resulted from previous non-traditional challenges. No matter what happens, 2019 won't be dull."


Bill Webb, The London College of Fashion Business School, Member of the Ebeltoft Group of Retail Experts:

Bill Webb (photo: Bill Webb)
Bill Webb: "The circular economy will gain acceptance"
"I believe that 2019 will see an acceleration of the acceptance of the concept of the circular economy. Those who manufacture products will increasingly be required to accept responsibility not only for their packaging but also the recycling or re-purposing of the goods themselves. This will be the catalyst both for new retail business models and new supply chains and support infrastructures.

Rental and subscription models will continue to emerge in many sectors. This will, for example, bring luxury goods within the financial reach of younger customers in China and other emerging markets as authorities clamp down more strongly on counterfeit and illicit product.

Not only will this trend speak to growing concerns about sustainability and environmental protection, but it will facilitate greater resource productivity, reduced inventory levels, more sales at full price and the development of customer databases capable of deep mining.
"


Julian Wild, Partner, Corporate Finance for Rollits LLP, Hull, UK:

Julian Wild (photo: Rollits)
Julian Wild: "A dog's Brexit"
"It won't be a surprise to anyone that for UK food manufacturers and retailers Brexit is the most significant on-going development and the most important challenge. This country's planned departure from Europe as from March 31, 2019 continues to overshadow everything and is the cause of huge uncertainty.

For UK food companies with any significant level of imports of raw materials and packaging, as well as a substantial workforce from elsewhere in the EU, these are difficult times.

Inevitably the implications of Brexit extend to retail customers, who themselves are facing huge challenges from online retailers. Major capital expenditure for many companies is on hold until greater clarity emerges. It is, as has been described, a 'dog's Brexit'!

Santa Klaus (photo: imago_Zuma_Press)
Ho ho ho: In an exclusive interview with German Retail Blog at HQ in Lapland Santa Klaus expressed his despair at the thought of the extra paperwork connected with cross-border delivery after Brexit. He says he is seriously thinking of going online next year
I now discern the plans: Mrs May – runs down the clock to mid-January and tells Parliament it's her deal or no deal in the hope that she can get her one over the line as there isn’t time for an alternative.

Mr Corbyn – resist a no-confidence vote as long as possible (possibly forever) because he knows he can't win one and, if he loses, Labour Conference decided that it has to be a second referendum, which Corbyn definitely doesn't want. So he keeps his head down and watches the Tories tear themselves apart and hopes that at some stage the country so despairs of this Government that it wants a change. He may have a long wait.

In the meantime, sterling goes down the plughole, and Government (totally unprepared) and business spend billions on getting ready for No Deal, which parliament overwhelmingly doesn't want and doesn't expect. Madness."


Carlos Yescas, co-founder & owner of Lactography in Mexico and Program Director of the Oldways Cheese Coalition in the US:

Carlos Yescas, co-founder & owner, Lactography (photo: Yescas)
Carlos Yescas: "Product packaging must provide actionable information for consumers"
"Please let me start from my own field and work outwards: There is little space to write anything on the front of food packaging because it also has to accommodate the company logo, the product type, and total quantity. But producers are now deciding to include the logos of other organizations. Whereas before there were self-made claims, like 'rich in calcium', 'low calories', and 'good for heart health', now there are recognizable emblems.

So for the past 15 years, consumers have been getting used to seeing 'Bio', 'U.S.D.A. organic', 'Rainforest Alliance', and 'Fair Trade' insignias on commodity products.

However, the new logos really look different. Claims have now expanded to animal welfare, 'certified humane' agricultural practices, 'non-GMO project', and even workers' rights and economic impact – 'B-Corp'. These third-party labels certify the producer's business practices, and consumers are making purchasing decisions based on that information.

However, some of the statements have become confusing and difficult to understand. In the next two to five years, we will see an increase in third-party validation. Here is fertile ground for organizations and governments to translate some of the information on back labels into actionable information for consumers."



Statements collated by Mike Dawson, International Desk Editor,
Lebensmittel Zeitung

A happy, healthy, wealthy and imaginative New Year to all our international readers
, and we promise to stay keen in twenty-nineteen (ha ha)...


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