As a Chief HR Officer, you know that hiring the right talent is critical to the success of your organisation and the cost of a bad hire in retail can be substantial. In the retail sector, finding top talent can be particularly challenging, given the competition for skilled workers and the ever-changing demands of the industry.
However, making a bad hire can be costly, both financially and in terms of the impact on team morale and productivity. In fact, according to research, the cost of a bad hire can be as expensive as between 50% to 200% of the employee’s annual salary.
The impact on team morale and productivity
The cost of a bad hire in retail can have a significant impact on team morale and productivity. A study by Harvard Business School found that a toxic employee can cost a company more than $12,000 in lost productivity. This includes the time and resources spent managing the employee’s behaviour, as well as the impact on other team members.
The impact on customer satisfaction
In retail, customer satisfaction is critical to the success of the business. A bad hire can have a negative impact on customer satisfaction, leading to lost sales and damage to the organization’s reputation. A study by SHRM found that 95% of organizations reported that bad hires have a direct impact on their customer satisfaction.
The cost of replacing an employee
Replacing an employee can be expensive. This includes costs such as recruitment fees, training, and lost productivity. In retail, where turnover rates are high, the cost of replacing an employees can quickly add up.
The solution
Therefore, it’s crucial for retail companies to invest in a robust and effective recruitment process to ensure they hire the right person for senior-level positions. This includes thoroughly evaluating candidates’ skills and experience, conducting thorough reference checks, and involving multiple stakeholders in the hiring decision. The cost of a bad hire can be significant, and taking the time to make the right decision can save a company a lot of money and potential damage to its reputation.
One of the most significant advantages of working with an executive search firm is their access to a wider talent pool. Executive search firms have extensive networks and resources to find the right candidates for your organization, including passive candidates who may not be actively looking for new opportunities.
Our focus on long-term partnerships
At re:find we believe that recruitment is not a one-off transaction but rather a long-term partnership. We aim to build long-term relationships with our clients, providing ongoing support and advice to help them find and retain the best talent for their organisation.
We understand that every organisation is unique and that there is no one-size-fits-all solution when it comes to recruitment. That’s why we offer bespoke recruitment solutions that are tailored to meet the specific needs of each client. Whether you need help with a single hire or a full recruitment campaign, we can help.
We are committed to providing our clients with the highest quality service. We take the time to understand your organization’s culture and values, as well as the specific skills and experience needed for each role.
For more information please get in contact with our Managing Director, James Cumming.
International success is one of retail’s holy grails but despite notable wins, Kingfisher’s results today show it is one of the most elusive of prizes.
As one senior retailer with extensive overseas experience told me, things are always going wrong in at least one important market. He questions whether it is actually possible to be successful on a truly global basis.
There is plenty of evidence to support that view. It’s not just Kingfisher that has beat a retreat from markets once seen as great opportunities like Russia and China. Tesco has too. And Walmart, which hopes to offload Asda to Sainsbury’s, is another case in point.
Global ambition is frequently spurred by the idea that there is today an ‘international consumer’ who wants the same whether they live in Swansea or Shanghai. The success of Asos, which describes itself as “a global fashion destination for 20-somethings”, is typically cited as proving that point.
While such a generation may be nascent, the particularities of place and people still matter hugely, as the travails of B&Q’s owner show. The mixed success so far of the ‘One Kingfisher’ strategy, including greater product in common across its markets, illustrates that starkly.
Uniting consumers
Kingfisher can certainly claim some advances from the strategy and it can point, as it did in its results statement, to the fact that “sales of our unified and unique ranges continue to outperform non-unified ranges”.
However, its overall performance was poor and the architect of the strategy, chief executive Véronique Laury, is to depart when a successor is found.
As Whitman Howard analyst Tony Shiret noted: “The news that Laury will be leaving the group… effectively means the company is calling time on her ambitious One Kingfisher transformation plan.”
Whether you put Kingfisher’s difficulties down to unaddressed differences in consumer tastes in various countries, generally tough conditions or the disruptive influence of the gilets jaunes protests in the important French market, the point is that international success is extremely difficult to achieve.
Gone are the days when giants could simply replicate abroad the model that brought success at home. More than product, what perhaps does unite consumers around the world is shared aspiration and behaviour.
Everybody wants a better life. Increasingly everybody is conducting more of their lives through smartphones. That’s evident from China to Africa, where pan-African etailer Jumia has grown to the extent that it is planning a Wall Street IPO that could value it at $1bn.
And while Walmart is scaling back its interest in the UK, it is upping the ante in India, where its $16bn acquisition of Flipkart shows that it is how shoppers buy as much as what they purchase that is seen as most likely to bring future success.
Bold moves
That same combination of aspiration, combined with the desire for convenience, speed and value is what has driven the rise of one of the big contemporary international retail success stories – Amazon.
But the ability to key into unifying behavioural patterns isn’t restricted to the new online giants. Ikea, which itself has had its ups and downs, has perhaps been more forward-looking than its rival Kingfisher.
The Swedish furniture titan is boldly nailing its colours to the mast of urbanisation, which is occurring across the world, and developing new formats in response. Similarly, Ikea initiatives such as renting furniture are driven in reflection of changes in how people live rather than just product.
Whether Ikea’s bets pay off remains to be seen, but it looks as if its ideas could tap into transforming times more than some of the shifts Kingfisher has made.
Ironically, Kingfisher owns one business that does reflect the common desire for speed and convenience – Screwfix, which can offer click and collect in just one minute.
It’s a business that has been built through intimate customer knowledge that is then executed upon with flair. That’s a foundation stone of retail success anywhere in the world.
Click here to read the original article from Retail Week.
To discuss this article further, you can email me on danny@refind.co.uk.
re:findhelp businesses find the talent they need to deliver transformational change. Clients call us when they need change to happen quickly and effectively. We are Executive Search and Interim Search specialists.
Click here to read about what we do specifically in the retail sector.
A change-advisory board (CAB)
delivers support to a change-management team by approving requested
changes, assisting in the assessment and prioritisation of
changes. A CAB is an integral part of a defined
change-management process designed to balance the need for change with the need
to minimise inherent risks.
The CAB members should selectively be chosen to
ensure that the requested changes are thoroughly checked and assessed from both
a technical and business perspective. The considered change will dictate the
required personnel to convene in a CAB meeting.
A CAB offers multiple perspectives necessary to
ensure proper decision-making. For example, a decision made solely by IT may
fail to recognise the concerns of accounting. The CAB is
tasked with reviewing and prioritising requested changes, monitoring the change
process and providing managerial feedback.
How do you manage a CAB effectively?
Here are four good tips to running a
CAB:
1. Get the agenda out early and encourage discussions before the CAB. Don’t wait until the last minute to publish the upcoming CAB schedule. One of the frustrating things about attending CABs is that attendees often don’t really know much about the changes until they get to the meeting. Publish the list early so attendees have a chance to get up to speed on the proposed changes. This way, they can get with change requestors and sponsors before the meeting to get a clear understanding of what is proposed. If you don’t, then your CAB will be overtaken with efforts to solve any personal issues people have with proposed changes.
2. DECISION MAKERS attend the CAB. The CAB members should be selected based on their knowledge and meaningful input to the meeting. What happens when CAB invitees can’t make it and send their designated hitters? Simple: ensure that then people attending have the authority to speak on the behalf of the person they are sitting in for. There’s nothing more frustrating than discussing a change and a key role says “I don’t think I can speak on that, I’ll have to get approval from my boss.” If they can’t speak on behalf of their boss, then they don’t need to be there. You can either clarify this need with the attendees before the meeting, or reschedule the discussion to a later CAB when the key personnel can attend.
3. Know your decision thresholds. Do not attempt to approve a change that is bigger than you. Follow your organisation’s governance guidelines and determine the rules to decision making. This means that you should know exactly what thresholds (pound amount, risk level, impact, urgency, etc.) you are capable of approving.
4. Careful not to get into “rubber stamping.”
Many CABs get overwhelmed with complex and
numerous changes. The pressures of getting through these changes during a
meeting are enormous. This often results in sloppy approvals that may not
receive proper assessment – and can cause incidents once deployed. Ensure that
every change request receives the proper attention by scheduling enough time to
discuss them. Also, be careful not to blindly approve a request simply based on
who is requesting it. I remember a situation where a CAB approved a change
simply based on who was requesting it. This “rubber stamp” approval resulted in
a poorly managed deployment that caused several hours of downtime. The lesson
learned here is that it doesn’t matter who is asking, every change must have
the proper amount of analysis and scrutiny.
To discuss
this article further, you can email me on danny@refind.co.uk.
re:findhelp businesses
find the talent they need to deliver transformational change. Clients call
us when they need change to happen quickly and effectively. We are Executive
Search and Interim Search specialists.
Click
here to read
about what we do specifically in the retail sector.
Mindset vs skillset: redefining retail talent for the digital age
Today more than ever, chairs and chief executives are seeking our advice about structuring their organisations to compete in the digital age and creating the right leadership model for the future.
Increasingly it’s about behaviours, not just skills and experience.
Historically, retail has been an industry driven by ruthless efficiency, both at head office and in stores, and typically chief exec succession candidates came from buying and merchandising or operations.
Now the most likely contenders are a new breed of data-driven, customer-centric marketeers.
Disrupt or be disrupted
Companies need to continuously evolve and structures must be more fluid, moving from functions to centres of excellence, and from siloed departments to collaborative teams working together to fulfil the customer mission.
In many ways mindset has become more important than skillset; creating a learning organisation which is flexible and responsive and able to deal with ambiguity.
This is where the leadership style of the chief executive is critical.
Retail is hardly the career of choice for millennials, unless it’s a sexy pureplay, and the old ‘command and control’ approach has to give way to one that is visionary and strategic.
Pace and agility are key to success, and empowerment and engagement of the internal as well as the external customer is a must.
Structures need to be flatter and more inclusive, with a sense of purpose and fulfilment that goes beyond work/life balance to truly win hearts and minds.
Structure diversity
If the business model is omnichannel, with the majority of sales through stores, then an understanding of the operational disciplines in the form of a really strong chief operating officer may be needed.
We will have to take a more open approach to organisation design structures.
Above all, tomorrow’s chief executive must be a visionary with high EQ, who is really good at putting together a team that is collegiate and includes all the skills and talents to win in an increasingly complex and demanding world.
The message is clear – the route to the top in retail is changing and so must the leadership style.
And an increasingly fickle and demanding workforce is more likely to identify with a brand that champions collaboration, inclusion and engagement as its core values.
Click here to read the original article from Retail Week.
To discuss this article further, you can email me on danny@refind.co.uk.
re:findhelp businesses find the talent they need to deliver transformational change. Clients call us when they need change to happen quickly and effectively. We are Executive Search and Interim Search specialists.
Click here to read about what we do specifically in the retail sector.
HR professionals gathered recently to discuss the challenges and opportunities presented by HR reporting and analysis in retail.
Starting point
The starting point to more effectively understand your people, is to first decide on the data you want to collect, and how the data will be used and analysed. Simply collecting as much data as possible and then attempting to make sense of it is typically a much less successful approach.
At Travelex, one of the main focuses was on staff retention and the team wanted to better understand how to retain staff.
Managers were given access to the people data through the Workday system, and Travelex is now seeing changes in behaviours based on a better understanding of that data. If the data highlights an employee is potentially at risk of leaving, managers can now intervene earlier to find out why and potentially take actions to prevent this from happening.
Implementing new HR technology
One of the challenges that Travelex faced during implementation was changing the culture across its business in the UK and internationally to adapt to a self-service HR system. To overcome this, the HR team worked closely with the IT department and regional managers to implement the changes.
The company also focused on local needs, adapting its strategy based on regional and cultural differences internationally. There were also challenges around how the HR system was viewed by employees, and the HR team worked to show employees the value of using the system.
During the implementation process, it was useful for Travelex to focus on collecting and understanding only a selected set of data points that could be easily analysed and understood, rather than attempting to understand a huge amount of data. The selected data points were easy for managers to dissect and understand in monthly review meetings with their teams.
The right tools for self-service
The discussion then moved to giving staff the tools to use the self-service systems in store, and one of the challenges that came up was around connectivity.
In-store Wi-Fi is as useful for staff to carry out self-service HR functions as it is for consumers to enhance their experience, and definitely something worth investing in for retailers.
Workday provides extensive self-service capabilities that Travelex staff use on their own mobile devices regardless of their location.
Valued and effective
For HR systems to be useful and adopted by employees, they need to be easy to use and not require much training. One of the greatest challenges faced by several retailers in the room was the outdated and difficult-to-use HR systems in place in their businesses.
Pulling data together manually, having to create reports from scratch and dealing with dissatisfied staff who find the old HR system confusing or difficult to use were common complaints. Aside from changing systems, though, most retailers acknowledged they often needed to do the best they could with what they had available to them.
Retailers also debate how they can measure the pound value of HR functions for board members, and agreed this is one area where data can help. If people KPIs are agreed at the outset, then showing how those improved and what this means for the business is one way to prove HR’s pound value. It also helps the HR team if they can articulate how using the HR systems will make the life of employees themselves easier – it’s not just about making life easier for HR.
Looking to the future
Looking to the future of more effective HCM systems that help HR, employees and managers, the discussion turned again to data and how to use it most effectively.
Performance reviews online are difficult to get right, as it’s hard to replicate the richness of one-to-one conversations. On a system these conversations become very black and white. It ends up just being a score on a screen.
Some advice for all retail HR professionals who want to use data to better understand their people: decide what data you’re going to collect and then what you want to understand from that. Unless you’re clear on that, you won’t be able to make better decisions for your employees.
Click here to read the original article from Retail Week.
To discuss this article further, you can email me on danny@refind.co.uk.
re:findhelp businesses find the talent they need to deliver transformational change. Clients call us when they need change to happen quickly and effectively. We are Executive Search and Interim Search specialists.
Click here to read about what we do specifically in the retail sector.
Retailers should look on today’s tough market as an opportunity. The current tough trading conditions and the structural changes to the market give retailers a rare opportunity to establish a winning position for many years to come.
The squeeze on consumer purchasing power will be a fact of life for some time. But of more importance is the growth of the internet, already influencing a high proportion of transactions, whether in store or online. In some product categories, the internet is rapidly taking over from stores as the main sales channel.
Tougher times encourage customers to look harder for value, whether that be price, service, design, availability or convenience. This accelerates the growth of new distribution channels and changes to the supply chain as the new technology enables better value to be delivered to customers.
At the same time cost inflation continues to exceed price inflation, intensifying the profit squeeze. Some retailers have already announced space reduction programmes.
Inevitably, some retailers now considered invincible will be overtaken by rivals, better attuned to today’s customers expectations, meeting them and earning profits. Some will disappear. Others will survive, shadows of their former selves. Some manufacturers are already trying to bypass retailers completely. And some competitors from other countries can supply from abroad.
To steer the path to the sunny uplands, three parallel paths have to be followed:
Deal with the short term. In tough markets many retailers increase prices, impose cost reductions that damage the brand and increase promotional activity. This might fool investors but not the customer. Far better to focus on the core brand values, reinforce them and deliver on exceptional execution. Then watch your competitors become weaker.
Define a clear vision of what is needed to be a winner in the next decade and communicate it. Ensure this vision encompasses best practice worldwide, including new and non-traditional potential competitors. Invest in the new skills and resources needed to successfully innovate. Act early.
Provide the transformational leadership needed to overcome the natural inertia and resistance to change. Colleagues want certainty and often find change threatening. Investors want short-term profits and need convincing about the investment. And the media will be a voice for the doubters and vested interests. Innovations need to be protected and nurtured while those dealing with the short term need to feel valued and part of the future.
Successful transformations are challenging and take time. Many more fail than succeed. It is too easy for management to manage short-term profits, talk about tactical innovations and achieve the incentive plan targets, hoping that the tipping point will not incur on their watch. Remain in denial too long and it will be too late.
The leadership need to have the foresight to see the opportunities early and the motivation, incentive and skill to manage a successful transformation.
Leading colleagues, investors and other stakeholders through the transition and the associated learning process is a tough challenge but immensely satisfying.
Click here to read the original article from Retail Week.
To discuss this article further, you can email me on danny@refind.co.uk.
re:findhelp businesses find the talent they need to deliver transformational change. Clients call us when they need change to happen quickly and effectively. We are Executive Search and Interim Search specialists.
Click here to read about what we do specifically in the retail sector.
You don’t need to have ‘stuff’ in a store for it to be a shop. There are alternatives.
Imagine this. You’re in shopping mode and heading down to the high street. There are a load of stores with shelves groaning under the weight of all the inventory displayed within their walls. You are spoilt for choice.
Yet instead of selecting from any of them, you head for the one emporium that appears to have no stock whatsoever. It might sound a curious decision, but it is not without merit.
You’re a modern person and you know your way around both your laptop and the smartphone to which you are umbilically attached.
So you know exactly what’s out there and what the price of almost everything is, long before you arrive at the shops. All you have to do is pick up your order and perhaps have a little ‘service’ time.
That is the underlying premise of Nordstrom Local, an offshoot of the eponymous Seattle-based department store group designed to provide a more convenient option for existing customers, layered with a range of services.
At present there are two Nordstrom Locals, both in Los Angeles. The first opened at the end of last year and the second, measuring 3,000 sq ft, welcomed its first ‘shoppers’ a couple of months back.
They do have a very limited amount of fashion stock, but none of it can be taken away and the clothes are really just there as tasters of what Nordstrom is about.
More to the point, they are not just glorified click-and-collect stations. Instead, visitors can have a coffee at the in-store café (or maybe even a ‘drink’ drink) while they wait for their shoes to be repaired, having handed in their clothes to the dry cleaner, prior to having a manicure. This is service.
And shoppers appear to like it. Two more Nordstom Locals are scheduled for LA this year and it’s a fair bet that more will follow in other large Nordstrom-friendly conurbations.
Is this, however, a store? It doesn’t really have anything tangible that you can buy in situ and walk away with, but it does provide something that Amazon at present cannot.
Shoppers may make purchases online, but they can then enjoy a range of services as they complete the transactional loop when picking up the goods.
This is an online shop with bells and whistles and seems a good alternative to the mundane click-and-collect counter. There are also reasons to come back.
Nordstom Local may not be the whole of the future, but it certainly looks like one direction in which things are headed.
Click here to read the original article from Retail Week.
To discuss this article further, you can email me on danny@refind.co.uk.
re:findhelp businesses find the talent they need to deliver transformational change. Clients call us when they need change to happen quickly and effectively. We are Executive Search and Interim Search specialists.
Click here to read about what we do specifically in the retail sector.
Tesco has launched a consultation with 9,000 workers as it ramps up efforts to build a “simpler, more sustainable business”.
The supermarket giant is proposing a raft of changes that will affect staff working on in-store counters and in stock management, merchandising, staff canteens and head office operations.
It has been a constant theme during Dave Lewis’ four years in charge of Tesco – building a simpler, more sustainable business, focused on serving customers better.
On Monday, Tesco revealed the latest phase of that long and arduous journey during a series of emotionally charged meetings with staff.
Service counters such as fishmonger’s, butcher’s and delicatessens will close in 90 Tesco stores. The number of hours required on merchandising will be slashed as the grocery giant reduces the number of layout changes it makes in its supermarkets.
Similarly, there will be a “significantly reduced workload” for those working on stock management as new technologies track gaps on shelves. Staff canteens will no longer have a hot food service – negating the need to employ third-party caterers – and 500 jobs will be axed at head office as the retailer moves to a “simpler and leaner structure” at Welwyn Garden City.
Basic economics
Bernstein analyst Bruno Monteyne, a former Tesco director, also understands the motivations behind the grocer’s sweeping changes.
He believes they would have been “planned and executed over several years”, rather than being a knee-jerk reaction to the “competitive and challenging market’”.
Those challenges have been born out much more than the changing shopper habits Tarry alludes to. A perfect storm of rising rents, ballooning business rates, the increasing popularity of online shopping and the relentless onslaught of the discounters has forced Tesco – and its big four rivals – to radically rethink operations.
“The increased wage costs, National Insurance contributions, business rates and the like will all contribute to the basic economics of the counter operation making little sense in many stores,” Grocery Insight director Steve Dresser says.
The emergence of the discounters as a mainstay of British food shopping has also played a big part in Tesco’s streamlining. The supermarket giant is bidding to regain a group margin of 3.5% to 4% by 2020, and so operating in a more efficient fashion – in the way that Aldi and Lidl so famously do – has been a central driver.
But the growth of the German duo has had some potentially unforeseen consequences. As Tesco ploughed investment into its entry-level ranges – creating the successful stable of ‘Exclusively at Tesco’ brands – shoppers have been slowly lured away from the service counters that were so long seen as a crucial differentiator between big-four operators and their discount counterparts.
“The irony with this strategy is that chasing discounters in meat, fish and cooked meats has led to a strengthening of the value tier in terms of price points and range, designed to stop discounters establishing a price gap,” Dresser explains.
“However, if you make your aisle of product cheaper and certainly equivalent to discounters’, then there are fewer reasons to visit the service counters unless you are a real die-hard shopper.”
Beware the pitfalls
The finances, then, seem to stack up. But could the changes have an adverse effect on the store experience? It is a pitfall that both Sainsbury’s and Asda have fallen into in the not-too-distant past.
Both grocers made radical changes to store teams over the past few years, most recently Sainsbury’s when it “reset” its shopfloor structure in 2018. The business “streamlined” the number of in-store roles, creating five “broader” positions – down from the 22 it used to offer.
But availability in its stores suffered during a hectic summer of trading, as its supermarkets struggled to keep up with demand heightened by the heatwave and England’s surprise progression in the World Cup. Those issues were not fully addressed ahead of the crucial Christmas period, despite the protestations of boss Mike Coupe.
Similar fears may well be raised among analysts and Tesco investors after it said it had “found a simpler way to conduct store routines”, which would be rolled out to all its shops.
Clive Black, head of research at M&S and Morrisons house broker Shore Capital, is among those who admits he will be “watching with heightened interest to see overall availability in the estate over time” as the new model filters through.
Roberts, however, has few concerns and suggests some of the hours freed up from the service counters could be used to make sure customer service and availability do not deteriorate in a similar fashion.
“You can tell that counter staff aren’t all rushed off their feet. If they can be redeployed elsewhere to contribute a lot more to customer service, or to improve availability, then arguably that’s a better use of their time and Tesco’s money than standing behind a quiet service counter. I wouldn’t read too much into it in terms of the impact it will have on the broader offer,” he argues.
Minor risk
But could the loss of those counters – and the expert knowledge that employees working on them are supposed to provide – ultimately lead to a loss of customers? After all, Morrisons sees its market street proposition of butchers, bakers and fishmongers as a key USP – and that could leave it well-positioned to reap the rewards of Tesco’s move.
“To some shoppers, at least, counters are an important part of how they shop. It might be the case that this is a deal-breaker for them and they will shop elsewhere,” Roberts says.
“The obvious choice for those shoppers would be Morrisons and, to a lesser extent, Waitrose. Indies as well might be able to step up to the plate on meat and fish in particular. But ultimately, fresh fish in the UK is such a microscopic part of our way of life that not many people are going to miss those counters.
“So the overall risk of Tesco losing customers is minor. It doesn’t appear that a lot of shoppers are habitually frequenting the counters and spending a lot of money through them.”
Echoing Roberts’ views, Monteyne concludes that “the plan reassures us in many ways” and insists the impact on Tesco’s quality credentials “should be minimal”.
But the effect on costs should be more visible. Monteyne estimates Tesco will save between £150m and £170m a year as a result of the latest structural changes. About 70% of those benefits will be felt in 2019/20 – the year Tesco is aiming to return group margins to that magic figure of almost 4%.
Monteyne’s ultimate conclusion should ring in the ears of Tesco’s critics and rivals: “Anybody doubting the Tesco margin recovery should think again.”
Click here to read the full article by Retail Week
re:findhelp businesses find the talent they need to deliver transformational change. Clients call us when they need change to happen quickly and effectively. We are Executive Search and Interim Search specialists.
Click here to read about what we do specifically in the retail sector.
As we head into 2019, we’re facing a pretty uncertain time. While 2018 was a year of growth for many retailers and brands, accelerated by tax cuts and low unemployment, 2019 is more precarious. The stock market is in flux, many retailers are facing the reality of steepening tariffs, emerging markets are flexing their muscles as they take on a greater share of global growth and it’s anyone’s guess on which way the wind might blow fickle consumers and their expectations for connectivity around every transaction.
That said, you could also say that the glass is more than half full and that these challenges also present opportunities for savvy retailers and brands willing to face the winds head on. Here are 10 key points on what the retail industry should expect in 2019.
Click here to read the full article by Forbes but here is an overview:
1. Retailers will get personal with zero-party data
Consumers are becoming more aware of their rights thanks to Facebook and GDPR, which is making way for a new age of privacy and personalisation. If 2018 was the year that marketers were forced to wean themselves off third-party data sets, 2019 will be the year they shift to “zero-party data.”
2. Small is the new big
Digitally-native and niche brands have come on the scene over the last couple of years, and 2019 will be the year that the growth of these brands will eclipse the growth of traditional retailers – and not only in their online businesses.
3. Customer-centricity will go mainstream
Retailers have been saying they want to “put the customer at the center of everything they do” for the past two or three years, but have struggled with how best to scale this. In 2018, retailers learned that simply monitoring social media is not enough. We believe that, thanks to the adoption of technologies like Voice of Consumer (VoC) Analytics, 2019 will be the year that the industry actually makes the customer-centric model happen. Offers a robust solution that enables them to determine what their customers want and also to deliver it – with speed and at scale.
4. Retailers and consumers will begin to feel the weight of tariffs
Retailers will be faced with making decisions in 2019 to determine the categories and products they raise in price and push the cost increases onto the customers, and where they need to absorb the cost increases themselves. This may force retailers to evaluate whether it makes sense to exit certain categories if they cannot sell product profitably. We all wait on the outcome…
5. Algorithms take control
Retail has long been driven by savvy merchants who had a penchant for following their gut to the right product selections and it has been an art far more than a science. But as more retailers implement innovative tools to leverage consumer data – whether to confirm the merchant’s gut feeling, or to guide decisions altogether – 2019 will be the year when the true science of retail takes hold.
6. Millennials will flock to brands – they will want luxury
Millennial purchasing power continues to increase. By 2025, Bain & Co. forecasts that Millennials and Generation Z will represent 45% of the global personal luxury goods market. This is a great opportunity for luxury brands, but it’s also a challenge since younger consumers think and shop differently than their parents.
7. Baby Boomers will constrict spending in a much bigger way
Along with the growth of Millennial spending, comes the decline of spending by Baby Boomers. Millennials are expected to overtake Boomers in population in 2019 as their numbers swell to 73 million, while Boomers decline to 72 million. But the Boomer segment is still a huge cohort whose spending habits drive the economy.
8. Apple jumps the shark
A warning to Apple aficionados: The Crown of Cupertino is losing its luster. We haven’t seen any real innovation from Apple in years – with only incremental enhancements to the iPhone and Mac since 2010. Apple has grown revenues by increasing prices – the average selling price of an iPhone in 2018 was $765 which was up 20% from 2017, while unit sales have flattened out.
9. Amazon: Prime membership plateaus and prices increase
Amazon’s growth of Prime membership is showing signs of slowing down. At 55 percent, just over half of the U.S. is subscribed to Prime, which is about the same as in 2017. This was the first year that Prime membership did not increase. Some of this may be due to the fact that Amazon raised the Prime membership price in May to $119, but it is more likely a function of reaching a saturation point in the U.S. market.
10. The final divide of retail winners vs losers
2018 saw additional retail bankruptcies, and 2019 will be the year of the final shakeout. Most of the winners and losers have been decided, but several more will hit the mat this year.
As in any year, 2019 will have a tremendous amount of opportunity for those who spot the trends and position their companies to capitalise on them.
re:findhelp businesses find the talent they need to deliver transformational change. Clients call us when they need change to happen quickly and effectively. We are Executive and Interim Search specialists.
Click here to read about what we do specifically in the retail sector.
You can hardly believe that athleisure and vegan foods were previously untapped sources of sales growth in recent years. So what are the emerging trends which will drive consumer spend in 2019?
The rise and rise of ‘free-from’
One of the biggest growth categories in grocery over the last 12 months has been vegan food. UK retailers have grabbed the trend with both hands, and the UK was found to be the nation where the highest number of vegan food products launched in 2018, according to Mintel’s Global New Products Database.
Sixteen per cent of food products launched in the UK last year were badged as vegan, double the 8% in 2015.
The combination of increased awareness among shoppers of food provenance, sustainability and health benefits, as well as the burgeoning use of social media to find new product recommendations, will continue to drive the growth of vegan food in the years ahead.
The area of grocery that will deliver the greatest sales increase is in the free-from category – foods that are free from specific ingredients such as dairy, wheat and gluten.
The uplift will be driven by shoppers whose needs span from the necessity to cut out ingredients for medical reasons to others, similar to flexitarians – people who tend to eat vegetarian food but not exclusively – who want to limit but not exclude a certain ingredient from their diet for more general health or ethical reasons.
The free-from category grew by 18.5% in 2018 to hit £1.8bn and we expect the category to reach £2.3bn by 2020.
Wellness
A big beauty and wellness trend in 2019 will be savvy shoppers adopting a simpler approach to cosmetics and skincare, and expecting fewer products to pack a greater punch.
The craze around complex 12-step Korean skincare routines of last year has begun to be usurped. This is in favour of more straightforward Australian and Scandinavian beauty products, which leverage their natural ingredient credentials to drive sales.
The focus on natural products in health and wellness has led to the rise of another rapidly growing product category – CBD, a derivative of cannabis without any of the psychoactive qualities commonly associated with the plant.
CBD-infused products can be used to treat a variety of ailments including inflammation, arthritis, anxiety and PTSD. Today it is being deployed in a growing variety of health and beauty products from oils to body lotions and is on track to become a $22bn industry by 2022, according to consultancy the Brightfield Group.
US department store Neiman Marcus and UK health chain Holland & Barrett have both launched CBD-infused cosmetics lines this year, while Whole Foods has named CBD as one of 2019’s top food trends.
The trend of shoppers expecting health and beauty products to work harder for them is also apparent in the increasing appetite for personalisation in cosmetics and supplements. Mintel’s director of trends for EMEA, Simon Moriarty, believes personalised products will be a key growth category for the health and beauty sector this year.
Smart tech
In electricals, a key area of growth is likely to be smart-home products. Dixons Carphone’s go-to-market planning director Zeena Hill says voice assistants, which recorded a 130% increase in sales this year, will grow exponentially based on their ability to be synced with other smart devices in a customer’s home.
John Lewis’ audio and connected home buyer Katrina Mills, believes this technology will have implications for all areas of the home.
“In the kitchen, we have seen a rise in appliances integrating smart technology including Google Assistant and Amazon Alexa, so automation will be more prevalent. For example, customers will be able to control their oven or coffee machines with simple voice commands or reorder food via their smart fridge,” she says.
“Another area of growth is home monitoring, which is mainly due to the category becoming much more accessible. The newest smart home monitors offer instant access via a dedicated app and often don’t require additional investment.”
Hill concurs that smart security systems, which delivered a 110% uplift in sales at Dixons Carphone in 2018, will be a key growth driver in the year ahead “as it appeals to both advanced smart-home customers due to simple integrations with other smart products and to new customers who understand the product benefits”.
According to Statista, UK sales of smart-home products will rise 16.6% and will hit a market value of $7.2bn (£5.6bn) by 2023, with household penetration hitting 43.5% from 25% this year.
The mindful consumer
An overarching trend impacting how shoppers spend across all categories is sustainability, with a particular focus on plastics.
A study by Kantar TNS of 1,260 people found 63% are concerned about reducing the amount of packaging they buy.
What’s more, the appetite for sustainability is driving market-beating growth in some categories. According to 2018 Nielsen data, sales of bath products grew at 1% overall but 14% when marketed as sustainable.
To monopolise on this trend ethical beauty retailer Lush has launched its first ‘naked’ shop in the UK this year, which exclusively sells products that are not packaged in plastic, while L’Occitane is offering eco-refills on products such as shower oils.
“Plastic-free aisles and products in retailers like Lush and L’Occitane won’t bring in enormous numbers of people because the people who really care about it are quite small in terms of the average shopper,” says Moriarty.
“But it’s a way to stand out and grow loyalty with shoppers who might go on to shop in other areas or shop there more often.”
The retailer is launching additional lines of loose produce and more sustainable alternatives to plastic in every UK branch.
“The issue we are seeing for retailers is that shoppers are aware and concerned of this issue in a way that we’ve not seen before now,” says Watkins.
“Ten years ago, food waste became a big topic for shoppers because they found out that on average a third of the contents of their fridge was thrown away. Saving money by limiting food waste is still a big way for shoppers to balance their budgets, which demonstrates that once these ideas are in customers’ heads they have longevity.”
While shoppers may not immediately reward the retailers that pay attention to issues such as single-use plastics, in the long term they are likely to punish those that do not make a concerted effort to be more sustainable by taking their shopping lists elsewhere.
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