December 26, 2019

Retail pundits predict 2020 and beyond

crystal ball (photo: Kzenon-stock.adobe.com)
Another year, another decade. Given the current rate of global warming, what will the state of the world be in 2029? Will electric canoes have replaced the motor car on flooded streets – much to the glee of Greta Thunberg, the new president of the EU Commission?

Brexit Britain will have either sunk into the North Sea or have confounded its detractors by transforming London into a Singapore-upon-Thames.

And what of today's strongmen? Will Trump, Putin, Erdogan & Co. be revered as national heroes in white marble monuments or will a new female meritocracy have assigned them to the dustbin of history?

In view of these riveting issues, it is almost unfair to ask our international panel of experts:

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

But perhaps they could at least tell us, whether these will be the Roaring Twenties for the trade or whether shopping as we know it will disappear for ever.

True to our reputation for fairness, we print their answers in alphabetical order of surname...

Retailing in the 2020's



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

Professor Joshua Bamfield, Director (photo: Centre for Retail Research)
"The massive Conservative victory in the 2019 UK General Election, whatever one feels about either the people or their policies, gives the public and business what most of them wanted: a definitive result, a return to collective cabinet responsibility, and an end to a parliament, which was unable to agree either to stop Brexit or to enable it to progress.

Uncertainties about the future have certainly not been vanquished. There will be a lot of misery to come. But consumer confidence is likely to return after a harrowing three years since the 2016 referendum. This, plus the expansionary policy of the new Government – however misguided – will produce additional spending by shoppers in the short- to medium-term, support the housing market, and aid the growth of business investment.

We do not see adequate long-term growth being restored any time soon, but expect a rather better Christmas and retail spending growth in 2020 of around 1.4 to 1.6 per cent. This will be an improvement over 2019 and should be stronger than many of our European neighbours.

We expect the rapid structural changes in UK retailing to continue in 2020. There will be considerable attention paid to engineering cost-reductions and cutting inventory lists. The focus on making bricks-&-mortar shops more differentiated, exciting, stimulating and involving for the average customer will continue, but there is no template yet."

Dagmar Bottenbruch, Angel Investor & Consultant, Berlin:


Dagmar Bottenbruch, angel investor & consultant (photo: Dagmar Bottenbruch)
"Sparked by the ubiquitous climate change discussions, the consumer is beginning to take more and more responsibility, and so are governments. As I said last year, consumption of animal protein continues to be under personal scrutiny. Meat consumption is gradually declining, and the consumption of dairy products even more so. 

One of the other main topics is packaging and the outrageous quantities of trash that are produced because of exaggerated plastic wrappers, containers, bags, and – in the case of online purchases – wrapping for transportation.

Diligent consumers have been separating their trash for years, only to find out now that much of the trash considered to be 'recyclable' is not recyclable at all, and much of this discarded material ends up in landfills or the oceans in the 'global south'.

Needless to say, the consumer feels betrayed! Retailers and producers would be well advised to come up with some creative ideas on how to present and sell products avoiding plastic and single-use packaging. Clever ideas that are truly sustainable could be a significant source of competitive advantage."


Professor Utho Creusen
, POSITIVE LEADERSHIP, Ingolstadt, Germany:

Professor Utho Creusen, Positive Thinking (photo: private=
"Retail is going robot. Artificial Intelligence is already a big part of our daily life. It's being used for financial transactions, logistics and packaging, and is helping us talk to our voice assistant.

Human labour costs are rising at the same time as the volume of skilled workers decreasing.

With the ascendance of AI and advanced mechanical engineering, customer-facing robots are becoming more affordable. They assist in specific, well-defined tasks like reception, guidance, frequently-asked questions (FAQs) and product presentations. They are therefore being deployed in retail stores, hotels and banks.

Companies like German-based Humanizing Technologies are tackling these challenges with customer-oriented solutions.

Their multi-robot software combines smart content creation with advanced conversational AI, while keeping everything code-free and easy for companies to use. This is just one example of how AI and robotics can help improve customer satisfaction and experience, while keeping the human factor in the loop."



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

Linda W. Eatherton, Partner, Director Global Food & Nutrition, Ketchum (photo: Ketchum)
"2020 will be a pivotal year for the entire food industry in the States as it finally shifts from being 'on its heels' to a stronger position of leadership and innovation. While profits are still weak, they are showing signs of revival for the first time in many years.

The retail and foodservice sectors will both play an enormous role in shaping the future of food consumption as they bend to new consumer behavior going forward. Both are in a race to flip from 'build-foot-traffic' to 'go-where-they-are' strategies.

The emergence of 'ghost restaurants' has been a game-changer here. Unbranded back-of-the-house foodservice prep centers are making branded meals for Quick Service Restaurants and independent restaurant chains, moving the entire carry-out business off brick & mortar premises.

The centrally-located centers provide both cost-savings and a more efficient location for rising delivery services like Grub Hub, Deliveroo and more. I predict that the retail grocery sector is going to latch onto this opportunity to move their inventory through ghost centers AND also supply ready-to-eat meals. Time will tell.

Retail grocery formats in the States are rapidly introducing 'micro-format' versions of their mega-market stores in order to move closer to the consumer in urban areas where real estate footprints are smaller.

It also enables those retail chains to compete harder with convenience markets, corner drug stores, and ubiquitous Big Box stores like Target, Walmart, Costco, who are all stealing market share from the local grocery chains. For this reason, I predict there will be a retail grocery play for a convenience store chain in the very near future!"


Martin Gaber, Partner responsible for German-speaking countries & international, JosDeVries, Munich:
Martin Gaber, Partner at JosDeVries (photo: JosDeVries)
"We believe that there is a need for imagination and creativity in order to attain a new vision on physical spaces. Over the last few years, the meaning of physical space has changed, and there are more and more vacant spaces.

Because retailers couldn't keep up or were just not relevant enough, stores have been replaced by internet shops.

We see these spaces as new opportunities, full of potential to create a new role for stores as meeting places. Where some see abandoned space, we see new places for people to come together, where they can experience a physical brand with all their senses. In other words, places to meet, enjoy, work, shop and study.

We are therefore working with ambitious retailers, brands and companies from other sectors in order to imagine a new meaning of space. We want to make empty spaces vibrant places. We believe that this is not only the biggest challenge for the future, but also the biggest opportunity.

To get more insights on this, our new book 'From Spaces to Places' will be published very soon. You can order an advance copy by emailing us at info@josdevries.eu or pick one up at EuroShop 2020 in Dusseldorf."


Dr Kay Hafner
, CEO, Hafner & Cie., Digital Change And Strategy GmbH, Essen, Germany:
Dr Kay Hafner (photo: Hafner & Cie)
"Local trade is not dead! Excellent, sustainable products and traditional brands – especially in the food trade – can survive without online platforms and social media.

The on-site shopping experience can be improved using digital tools (product information, cashiering, new product presentation), where personal customer experience and contemporary digital added-value merge nicely.

Overall, the increases in online retail will be more moderate than originally assumed. Mass and heavy products will continue increasing digital sales, but emotional, unique and personalized, or fresh products will maintain strong sales through local channels.

Especially younger target groups under 40 are very open to emotional, but digitally-supported shopping experiences. The current clean-food discussion and movement will only enhance this trend, so today's retailers will have to align themselves very closely with the values of their customers."



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

Tim Harrap (photo: Harrap)
"The production, distribution and retailing of food continue to enjoy the delights of Umstülpung! My word of the year – used by Otto Scharmer in his 2013 book 'Leading from the Emerging Future: From Ego-System to Eco-System Economies'.

Basically, Umstülpung describes in a single word an environment where things are turned inside-out, outside-in and upside-down. If we cannot imagine this in our commercial environment, then we are not awake to the innate flows affecting our world.

Starbucks Roastery's in Shanghai and Tokyo are a case in point. Their retail and food service environment has been taken to a new level of luxury and theatre in the experience economy. And, as I wrote here in 2015, the deepening of consumers' participation in this world is increasing their expectations of what retail means.

Couple this with the 'metro-fication' of supermarkets to smaller, at most, pop-up stores and digital supply chains, as exampled by Chinese online suppliers, then Umstülpung is nearly complete."



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

Ibrahim Ibrahim, CEO Portland (photo: Portland)
"The most significant development for all consumer-facing brands will be anti-trust laws and legislation on issues such as data, sugar, CO², plastic, air quality, child labour, gambling, misrepresentation etc. This is being driven not only by government, but by increasing animosity from consumers towards big brands, big firms, faceless and unaccountable organisations.

Fashion has been the latest sector to experience negative reaction on these issues.

Consumers will increasingly turn to brands that are transparent and demonstrate a social conscience and a bigger societal and environmental purpose. Conversely, consumers will shun brands that are secretive and whose sole focus is to sell stuff with little regard for the impact it has on the environment and communities.

I think we'll see the growth of 'B-Corps' (Benefit Corporations). These are a new kind of business that balances purpose and profit. They are legally required to consider the impact of their decisions on their workers, customers, suppliers, community, and the environment.

These firms focus on 'Triple Bottom Line', whereby the value of the firm and metrics of success are not limited to a single measure of bottom-line profit. The triple bottom line has three parts: social, environmental and financial, whereby performance is evaluated from a broader perspective in order to create greater business value.

The three measures of value (social, environmental and financial) are also referred to as the three P's:

* 'People' (social) – Value and success is measured through the development of employees and the welfare of customers, suppliers and communities that are impacted by the firm;

*'Planet' (environmental) – Value and success is measured through a firm's sustainability strategy and actions on issues such as carbon emissions and other impacts on the planet;
*Profit (financial) – The financial profit the firm achieves."



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

Uwe Klenk (photo: Uwe Klenk)
"The retail industry is constantly changing, and there are always new challenges faced by the players in this competitive industry. Since 2017 there have been several major retail companies that have filed for bankruptcy or are close to it, and this phenomenon might well continue through next year.

Though the prospect might not seem promising, this is not the end of days for retail. There are also many major retailers who have managed to survive and even grow their businesses (grocery as well as general merchandise). They have proven that they can face major challenges within the industry, which include:

* Keeping up with ever-changing customer expectations;

* Maintaining customer loyalty;

* Managing international/global communication;

* Finding the best technology solutions for the retail industry;

* A high-stakes global game of digital disruption;

* Retaining, engaging and motivating employees."


Neva Kubicki, Retail Analyst, Foley Retail Consulting GmbH, Vienna:

Neva Kubicki, Retail Analyst, Foley Retail Consulting (photo: Foley)
"Artificial intelligence (AI) technology advancements are opening new opportunities for retailers. Combining data analytics and AI is already being used to develop new algorithms, avoiding out-of-stocks and ensuring reduction of spoilage. As consultants, we are currently actively helping retailers implement and test AI-based cashierless store technologies all over the globe.

AI is slowly making way to mainstream retailing and enabling solutions such as: DNA-based grocery shopping, helping customers choose those products best aligned with their health and well-being; augmented reality, using consumers' smartphone cameras to show how furniture would look in their living room; smart mirrors, showing customers how new clothes would fit them, including size suggestions.

The AI-supported future of retailing will include product and marketing customisation adapted to consumers' individual needs and preferences. Suppliers are facing the biggest challenge in this future, needing to adapt to a new, highly agile and differentiated market, where simple economies of scale will be hard to sustain."



Boris Planer
, General Manager Germany, Edge by Ascential, Frankfurt:

Boris Planer, General Manager, Germany PlanetRetail (photo: PlanetRetail)
"The world obviously continues to face disruption from social, technological, economic and political change. Retailers and brands must therefore adapt to fast-changing consumer mindsets and shopping landscapes. So they are investing in sharper market positioning, greater differentiation, increased services, digital transformation and loyalty-enhancing ecosystems.

All this is happening in a context where the global ranking of leading retail markets will see significant change. China is set to overtake the US as the world's largest retail market next year and will grow by 12.1 percent to $4.5 trillion. This will put the People's Republic slightly ahead of the US at $4.4 trillion (+4.1 per cent).

While China's large export sector remains vulnerable to shocks from trade disruption – especially with the US – growth continues to be driven by the rise of rural populations who are breaking into the middle class. These upwardly-mobile consumers often buy goods via leading local online platforms Alibaba, JD.com and Pinduoduo.

Brands who don't already use these marketplaces, should use them to drive brand awareness, conversion rates, loyalty and customer lifetime value on what will be the world's new number-one market.

The list of global must-win markets is obviously still largely dictated by size, including the US, China, Japan, Germany, the UK, India, France and Brazil. But brands should be aware of accelerated transformation in more competitive retail landscapes, where high levels of investment activity are required.

They should also ensure that they are aware of key initiatives across the strategic pillars of e-commerce and digital ecosystem management, supply chain & fulfilment, future store design, and customer loyalty and retention. Only by observing these factors will brands be able to tap into the huge growth opportunities provided by global retailing in any energetic way."


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

Michael Sansolo (photo: Sansolo)
"Some random thoughts from the US: Despite an incredibly strong economy, there remains a large degree of anxiety and uncertainty in our retail industry. In 2019 we witnessed again a large dose of traditional retail being overwhelmed by shopping trends moving toward e-commerce.

Brick-&-mortar retailers continue to look for ways to fight back, and there are signs of success with some retailers, such as Walmart and Kroger, moving steadily toward omni-channel operations. Yet others, Target being a great example, found new success by emphasizing and improving in-store experiences.

However, uncertainty still reigns supreme. The US is now ten years into its current economic expansion — the longest in history — and there are strong signs that a recession is at hand, exacerbated by political uncertainty and international trade issues.

Should the downturn come, it will be unlike any other for US retailing thanks to the massive growth efforts of deep discounters such as Aldi and Dollar General in recent years. Widespread thinking is that a recession will drive customers to these competitors, which means traditional retail could face an unprecedented two-front battle: with e-commerce for convenience and with deep discounters for price-focused shopping.

As I said, uncertainty reigns."


Jon Springer, Executive Editor, Winsight Grocery Business, Chicago:

Jon Springer, Executive Editor, Winsight Grocery Business (photo: Heidi Shea)
"In US retail all eyes will be on what Amazon brings to the food space with a physical grocery chain expected to roll out shortly.

While a handful of new stores, no matter how dazzling, will have only limited direct effects, the industry is still reverberating from a massive secondary impact of Amazon's first foray into physical US food retail with the purchase of Whole Foods Market in 2017, and I could see it happening all over again.

That event helped to awaken transformation efforts across the food retail landscape, with new investments in pricing, technology and capabilities — some of which may turn out to be insufficiently transformative.

The US supermarket has historically been a resilient format. But new consumer demands for convenience and speed, and the changing ways they want to eat and shop — all of these impacted to some degree by Amazon and the digital society at large — is putting enormous pressure on established retailers to invest heavily and wisely. Much can still go wrong!"


Bill Webb
, Senior Lecturer - Retail Management at The London College of Fashion Business School and Member of the Ebeltoft Group of Retail Experts:

Bill Webb, The London College of Fashion Business School (photo: private)
"In the UK a new decade opens with a retail landscape characterised by record High Street shop vacancies, shopping centres blighted by unlet units, bankruptcies of once famous retail brands, and the erosion of even more retail jobs through developments in robotics and artificial intelligence.


A 'perfect storm' of factors is contributing to an unprecedented disruption of the retail sector, even as the new 'Generation Z' shopper eschews the accumulation of new 'stuff' as they engage with the values of sustainability, environmental protection and ethical supply chains.

The challenge for urban planning experts in the 2020's will be to repurpose our town centres so that they don't become wastelands and to begin adding value to the communities of which they form the central focus. This will take insight, courage and time.

A start would be to relax planning laws so that empty shop buildings, which often started life as homes, can be quickly brought back to affordable residential use or converted to it.

Then, an assessment needs to be made of the common space in every city and town centre in order to establish how it could best be zoned to meet the needs of local residents, using a viable financial model – that is to say, paid for by the citizens themselves or indirectly via taxation. Examples could include:

* Continued, centralized, modern retailing of selected goods and services;

* The consolidation of the proliferating number of charity shops into a branded Charity Shopping Centre making use of an empty large retail space and achieving economies of scale through shared services for the operators;

* A Refuge for homeless people and those down on their luck, including shelter, medical clinic, food bank, social services contact and social space;

* A Circular Economy zone including a second-hand market, recycling centre, a market for locally-sourced products and pop-up spaces for eBay, Gumtree, Vestiaire Collective and similar merchants;

* An e-commerce 'Last Mile' Depot with shared central warehouse, collection and returns facilities for couriers and customers, digital order points;

* An Experience & Entertainment proposition geared to the demographic profile of the local market, with the aim of improving engagement and cohesion amongst the increasingly diverse urban communities – and reaching the parts that religious centres fail to reach.
All suggestions welcome!
"


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

Julian Wild, Partner, Corporate Finance, for Rollits LLP (photo: Julian Wild)
"The development of some high-quality, plant-based products, which tick all the right boxes in terms of health, functionality and environment, is of fundamental importance.

That's not to say that eating meat is on the way out anytime soon, but there are some highly-innovative options for vegetarians, vegans, and anyone wanting to cut down on eating meat.

Brexit remains by far the biggest challenge for the UK in terms of the impact on sterling, import tariffs, future trade deals and, potentially most significant of all, the lack of available labour.

This is not to mention the UK having become a complete laughingstock to the rest of the world. In my view Brexit would be a catastrophic mistake but, given the current state of UK politics, it seems quite likely that we will shoot ourselves in the foot (and probably both feet)."


Clive Woodger, Founder, SCG London:

Clive Woodger, SCG (photo: SCG)
"The retail sector faces a conundrum when it comes to sustainability. Retailers, brands and developers promoting their green credentials comes across as green window dressing – or worse, corporate virtue signalling, given that their prime activity is to encourage ever more consumerism.

In the same way that the aviation industry is starting to face the challenge of SOF (shame of flying), how will retail handle a rising trend of SOB (shame of buying)?

Counter-initiatives like 'Green Friday' have a long way to go to change current societal values, given Alibaba's Black Friday astronomic sales figures. Retailers have to show that they care about the planet, despite the obvious contradiction of needing to sell more stuff people don't really need.

Retail real estate has to accept that it is a major contributor to the planet's carbon count and has a particularly difficult balancing act to give local communities, visitors, stakeholders and shareholders what they want.

Developers have to preach green technology and 'place making'. They now need to create mixed-use venues for leisure, entertainment, workplace and residential with less 'shopping'. They claim to be in an era of 'partnership', rather than just landlords collecting rent, but their basic business model cannot be changed unless their pension fund shareholders are happy to become philanthropists.

Ideally, there would be a new era of truly 'sustainable centres', recycling preloved and repurposed products and goods to justify their claim to be green. But there is no money in flea markets, charity shops or car boot sales, however popular they are with the public.

Appointing sustainability directors and promoting green principles is becoming standard for retail operations. Consumers are starting to demand real action to mitigate the inherent damage to the planet created by rampant retail. We are now told that people want experiences, not more stuff.

One sector that could help offline retail and centres is gaming and e-sport. This growing sector would seem to fit the bill in promoting global communities, appealing to younger demographics and to women.

Instead of being relegated to a basement, gaming and e-sport can now transform retail destinations by selling total engagement and shared experiences without having to flog tons of useless product to further clutter the environment.
The gaming and e-sport sector is massive. It is now worth more than worldwide film and music sales combined. Maybe this can help avoid future SOB accusations?"



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


We wish our readers a sustainable, ecological and ethically responsible New Decade. May we all
recycle plenty in Twenty-Twenty...


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