January 7, 2011

Retail experts predict 2011 and beyond

Future view (photo: mamarone_pixelio.de)
Forward view: Trade gurus scan the horizon (photo: mamarone_pixelio.de)
In January each year, our newspaper contacts a variety of international experts connected with retailing and asks them to guess what the future holds in store for the trade.

This time we approached a score of pundits in fields ranging from private equity to advertising and requested their answer to the following question in around 70 to 80 words: "What do you see as the most exciting development in retailing/the fmcg industry and the most important challenge in the future?"

Knowing that everyone is wiser after the event, a surprising number were brave enough to look into their crystal ball and predict the future.  

As their replies are self-evident, we give them below, without commentary and in alphabetical order of surname:

The Shape of Things to Come

Dr Klaus Behrenbeck, Leader, European Consumer & Retail Sector, McKinsey & Company, Dusseldorf:

Leader, European Consumer & Retail Sector, McKinsey & Company (photo: McKinsey & Company)
(photo: McKinsey & Company)
"The industry is marked by strength and foresight, as recent events once again demonstrate. It is impressive to see how numerous retailers and manufacturers have mastered the crisis and how confidently they look toward the future.

The topic of 'digital consumers' represents one of the most significant challenges for the coming year. More than two thirds of Germans over 14 years use the internet; more than half of them shop online – and this tendency is growing.

No one can afford to ignore the Internet any longer. Those who want to be successful in this channel must make this new world their own: meeting their customers where they surf and making them the right offer at the right spot.

Finally, a command of logistics matters too. If you can get your customers excited online, you can reap benefits in other channels as well."

Robert Bonwell, CEO of EMEA Retail at Jones Lang Lasalle, London:

Robert Bonwell, Jones Lang Lasalle (photo: JLL)
(photo: JLL)
"This is the decade of change and challenge for the retailing industry – it will not be like the last decade and the global retail landscape will be very different.

Retailers and shopping centre owners will be required to increase investment in new technologies, new markets and to have and use their understanding of consumers in a much greater way in order to be a winner in the growing pressurised economic and retailing environment.

Many of the solutions may have been discussed before but now it requires a higher level of action, debate and greater partnership between retailer and landlord.

Brands and retailers are challenged to reinvent themselves in the age of the Internet and multi-channel strategies. Retailers have to balance the global investment and expansion programme with back office consumer data investment and front office internet investment whilst they are busy enhancing their identities and giving them greater visibility in stores.

Such factors as heritage and credibility have clearly come to the fore. Ideally, a store will encapsulate a brand's DNA and provide it with a stage on which to perform to its audience. The bricks-and-mortar vs. web shop argument is over. What counts today is combining the respective strengths of either channel.

Those who create a perfect blend of location, and channel effectiveness with branding, store design and products will achieve more than just traditional customer loyalty – they will turn their customers into fans and will be winners."

Dagmar Bottenbruch, General Manager, Rabobank International, Frankfurt Branch:

Dagmar Bottenbruch, Rabobank International (photo: Dagmar Bottenbruch)
(photo: Dagmar Bottenbruch)
"I believe that the food industry will have to face a number of substantial challenges as the growing world population and changing consumer habits demand the increasingly efficient and cheaper production of food.

At the same time, it is not clear whether this can be achieved with the resources available to us, especially regarding land and water, and what this will mean for raw materials prices.

In addition, we must care for the environment and treat other species with respect. The good thing about these challenges is that the German food industry is well-positioned to meet them.

Germany is a favourable agricultural location, and our suppliers, due to their concentrated and aggressive retail customers, are used to producing very efficiently and to high standards."

Christiaan Rikkers, CEO Jos de Vries The Retail Company, Maarssen/NL:

Christiaan Rikkers, CEO, JosDeVries (photo: JosDeFries)
(photo: JosDeFries)
"The year 2011 will have to be a year of strategic re-orientation for most retailers. Numerous retail formats and positionings are still based on consumer behaviour before the economic crisis and will therefore seem out of touch in the future.

In our opinion, the consumer's demand to be recognised and appreciated as an individual will soon lead to a major shift in retailing. Consumption is no longer the highest goal and conspicuous overconsumption is increasingly regarded as wasteful.

Therefore, we shall have to think even more intensively about how to approach each consumer as an individual, and we shall have to develop relevant solutions. Fortunately, we shall be able to draw on an increasing number of new technologies, including, for example, the development of multi-format concepts.

Several space and time-dependent concepts will play a role within the overall brand experience. The motto will be: 'The best product for the best moment for the best location'.

In addition to the multi-format approach, new media and social media will come increasingly to the forefront. Twitter, Hyves and also the mobile internet offer us a treasure trove of possibilities which will enable us to reach new consumers at the right place and time. The new magic formulae will be multi-formats combined with multi-channels."

Sir Martin Sorrell, Group Chief Executive, WPP, London:

Sir Martin Sorrell, CEO of WPP (photo: Tom Campbell)
(photo: Tom Campbell)
"It's the same thing – how can fmcg manufacturers and increasingly global and powerful retailers work together in a constructive way to build sales and market share – particularly when private and own label is growing and in western Europe, where economies remain under pressure?

WPP continues to build an industry-leading capability in fmcg and retail in advertising, media investment management, consumer insight, public relations, branding and identity, health and well-being and, last but not least, digital, interactive and shopper marketing."

Dr. Peter Thormann, Partner Consumer Business, Deloitte, Munich:

Dr. Peter Thormann, Deloitte (photo: LinkedIn)
(photo: LinkedIn)
"The results of our yearly Deloitte Christmas Survey, where we asked more than 20,000 consumers in 19 European countries, do not only enable conclusions as to consumer spending behaviour during the pre-Christmas season, they also point to trends in 2011.

Overall, European consumers are feeling reserved because of the general economic situation, although a sense of cautious optimism is spreading in, for instance, Germany and Switzerland. This notwithstanding, the survey shows that Germany will stay a discount nation as both hard discount concepts and private label continue to grow.

Long-term, the buying behaviour of consumers will change even more fundamentally: An increasing number of Germans already research a potential purchase on the internet, compare prices and then proceed to buy the cheapest product online."

Dr. Alan Treadgold, Head of Retail Strategy, Leo Burnett, London:

Dr. Alan Treadgold (photo: Alan Treadgold)
(photo: Alan Treadgold)
"To some extent it depends on what geography and sector of the marketplace you're in. But, for me, the biggest challenge facing international retailing and the fmcg industry continues to be the backdrop of recession and global economic uncertainty.

However, this is very much a mature market point of view, and the contrast with the high growth outlook and high levels of consumer confidence in the emerging economies, especially China, of course, will be very stark indeed.

I see the transformative role of technology and the opportunities to engage with the shopper in new, interesting and very personal ways as absolutely the single most exciting opportunity for 2011 and very possibly for several years to come.

The businesses that truly understand how to exploit the new landscape of customer engagement will, I'm sure, be the ones that are able to build levels of customer loyalty that will deliver out-performance in their businesses."

Peter Wirtz, partner and co-managing director of 3i Germany, Frankfurt:

Peter Wirtz, 3i Germany (photo: 3i)
(photo: 3i)
"Retailing worldwide has recognised the chances arising from the internet and has duly developed numerous successful online business models. The sustained high growth in this field proves that we are experiencing a genuine evolution rather than just short-lived hype.

In past years, younger target groups mainly bought online. Now, however, older consumers are increasingly using the internet to make their purchases. The main challenge today therefore is to consistently develop existing business models.

One challenge, for example, will be to find profitable online strategies for low-price fmcg goods where the fulfilment costs in relation to the consumer end price are relatively high."

Clive Woodger, Managing Director, SCG London: 

Clive Woodger, Chairman, SCG International (photo: SCG International)
(photo: SCG International)
"International transparency and the challenges facilitated by social media have changed the dynamics of marketing and public relations. The internet and immediacy of instant communication media worldwide has put the consumer in control. Companies that are not used to positively reacting to criticism and customer opinions are in trouble.

The axiom 'doing what you say you do' has never been more relevant. Black PR ‘cut and paste’ communities must be answered and are far more numerous and nimbler than slower-footed official company media. Internet scouts become new front line for successful retailers and manufacturers.

You have to have your Facebook fans, Twitter and positive YouTube sequences. However, life is unfair, bad news is more interesting than good news; and therefore constant vigilance and response is vital. Everyone knows the best marketing is personal recommendation; the danger is mass condemnation through the power of social media.

The test is evaluating a negative tweet as positive feedback and reacting accordingly. Marketing and PR are now inseparable activities; the distinction between delivering campaign promises and crisis management is increasingly blurred."

Read in German: 'Ansichten' by international editor Mike Dawson on page 22 of Lebensmittel Zeitung, no. 1, 07.01.2011

German Retail Blog

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