Mid-Year Review Blog – Global Retail
1. What 3 words would you use to summarise the first half of 2017?
Technology, technology, technology.
Shoppers require technology to engage and retailers are embracing technology like never before. We have seen how they are using technology to redefine stores, address the extra mile in logistics and personalise the experience
2. Has 2017 lived up to your expectations so far? Why/why not?
We are starting to see marketplaces concentrating more and more on the ease and convenience of a purchase.
Amazon never stops to wow me – this year they have introduced a new Alexa (version of Amazon Dash Wan) with voice-enabled smart assistant built in for ordering food, getting recipes and controlling smart-home devices…
And, on the other side, brands focusing on the emotional side of a purchase. Building digital stores, creating community and culture. For me worth mentioning Farfetch “The Store of the Future,” that they launched at the Design Museum in London with a lot of new technologies to help brands and boutiques bridge the worlds of online and offline through augmented retail.
3. In January, 2017 looked to be a year of uncertainties – Trump’s presidency, the UK triggering article 50, a slowing global economy – to name just a few. What impact do you think these have had on global retail businesses? And what can they do to minimise further impact going forward?
Trump’s presidency or Brexit hasn’t stopped retailers, especially trading online.
The main (and only for now) impact of Brexit has been the increase of international cross-border sales from UK retailers. This was almost immediate after the pound sunk.
In the mid-term the weak pound will also affect the cost of goods or services off-shore. And retailers will need to think about hedging or increasing prices at some point.
And, in the long term we would need to wait to se what happens with free-trade. Any import/export tax could hurt retailers and they should be thinking about possible scenarios and how would they be reacting as cross-border commerce will still be the key to growth and success.
4. In terms of payments, what do you think have been the major developments so far this year?
I have to say our VR payment prototype, I have seen plenty of VR demos (quite impressive, actually) where you are asked to take off your glasses to make the payment.
Think about this for a minute, you have invested money, time and effort to build that experience and that emotional connection with you shopper that he/she is happy to make the payment. You have pushed the shopper through the whole conversion funnel but you need to interrupt it for them to pay. The emotion is gone and maybe the shopper as well.
5. And what payment developments do you think the second half of the year will deliver?
The second half of the year in retail is about scalability and reliability. There is no room for error as that is when most retailers move from red to black. Payments need to be resilient and not much innovation and trial happening.
Retailers should revisit the payment methods offered for the high volume events like Black Friday or China Singles Day. You need real time payment methods with almost no charge backs not to hold stock for long periods of time.
6. 2017 has seen major alternative payment methods (APM players) in the East (for example, AliPay & WeChat Pay) moving into new markets in the West. What impact do you think this will have on payments within Global Retail? If you were a traditional card provider, would you be worried?
The payment landscape keeps getting complicated, there are more and more payment options available in more countries. Retailers need to rethink how they localise, it is not a country by country game any more, it is a shopper by shopper game.
Digital credentials are more important than ever so the retailer can offer the preferred payment method to each individual shopper no matter where they are based.
These non-card payment methods are gaining market share because they are addressing a shopper need with an innovative proposition. Everyone needs to evolve, adapt and disrupt to maintain a place in the market, for traditional card providers this applies as well, they should be making things easier for the shoppers and adapting to the new technologies and devices that they are using.
7. At the start of the year, we highlighted India as the eCommerce rising star. Do you still think it is? Or have things changed?
India has a massive potential if we look at the number of people and the number of them coming online. Around 450M people are currently online and that number is expected to double to 600M in the next 4 years. According to Google “3 Indians are coming online every second”!
Now, for me the massive problem comes with the infrastructure. As retailers need to deliver physical products, developing markets with no delivery infrastructure are difficult to reach.
In the case of India it is worth at least considering partnering with a local player.
8. If you were CEO of a Global Retail business, which markets would you be keeping an eye on in the 2nd half of 2017?
This would depend on the type of product sold. If we are talking about fashion, China would still be my number 1. To be more precise the Chinese shopper, which is more global than ever, according to China Daily there are 50M Chinese people living overseas.
Chinese shopper have a lot of purchasing power, they spend 6.9% of their GDP online and are now more open to buy from non-Chinese retailers.
9. How do you see IoT impacting payments in global retail?
The main use case in retail is around home replenishment. This addresses one of the key shoppers expectations from a retailer – convenience. Fridges, washing machines, all predicting when to purchase more milk or soap.
But, this is already starting to go to the next phase, with Ai and Virtual personal assistants like google assistant or Amazon Alexa, which will predict not only when the product is running out but the shoppers needs and act on the shopper behalf… All driven by AI.
10. Do you think VR/AR will become mainstream this year? If not – what do you think is preventing it?
I am not sure we will see it this year, but I bet on 2018.
VR/AR is the new mobile. It bridges the online and offline world together just like mobile did but taking it to the next level, as it also enhances the experience much better than a flat screen on your way can, creating an emotional connection shopper-brand.
With VR/AR shoppers can engage but not only on the functional and information side of products (like mobile enabled) but on the experience of what is possible with the products.
Shoppers are ready to use it and in some countries like China, they are using this technology constantly. But, the main obstacle is the lack of opportunity, retailers are not offering it enough and there is still a high cost of device as a barrier for the shopper
11. This year we’ve seen an increasing trend for pure-play eCommerce retailers opening physical stores, pop-ups and showrooms. What do you think is driving this trend? And do you see it continuing?
The shoppers are driving the changes. More than ever there are no channels any more, shoppers don’t know when they will be online and when they will visit a store and hardly ever are online or offline only, they jump between channels constantly without even noticing.
That is the reason why having offline presence is as important as having an online one.
We have also seen the other way around and luxury brands like Valentino partnering with Yoox net a porter to use their online services in 2018 or Gucci with Farfetch
Competition is tougher than ever, margins are getting tighter and the shopper is more impatience than ever, so retailers can’t afford to stay still.