Pushing your purpose, driving diversity and reinventing stores
The best of WRC 2022
Paul Polman: Retailers that fail on climate change are ‘heading to the graveyard’
Former Unilever boss Paul Polman has urged retailers to escape “the rat race of quarterly reporting” in order to drive longer-term change on sustainability.
Delivering the World Retail Congress annual lecture in Rome to a standing ovation, Polman warned business leaders that “the time for action is now” and insisted retailers that fail to go green are “heading to the graveyard of dinosaurs”.
Polman’s words came just days after a new report by the Intergovernmental Panel on Climate Change (IPCC) warned it was “now or never” if the world is to stave off a climate disaster.
Polman acknowledged that the speed of change required was the likes that “we have never seen before”, but urged grocers and apparel operators, in particular, to take action now.
“It is in your hands – you decide what side of history you want to be on”
“Food and fashion obviously are at the heart of retail. They are a big part of the challenge, but also of the solutions. We simply cannot achieve the sustainable development goals without your industry,” he said.
“The food sector has the largest environmental and social footprint in the world. In fact, if it was measured on carbon emissions, it would be bigger than the fossil fuels segment. This sector will be the next big focus.
“You are responsible as an industry for 30% of greenhouse gasses, 70% of freshwater use, 80% of land conversion and degradation, and 70% of deforestation. But 800 million people still go to bed hungry every day, not knowing if they will wake up the next day. And then that system has the audacity to waste about a third of the food that is produced.
“The fashion industry – $1.5trn in revenue, employing 300 million people – is not much better. Biodiversity destruction, climate change and labour standards also feature highly in that industry in terms of the rankings – and not the rankings where you want to be.
“So where do we go? Do we just accept this and keep going? Do we make marginal improvements? It is in your hands – you decide what side of history you want to be on.”
Polman added: “Consumers are demanding the shifts, especially millennials and Gen-Zs – they want to buy brands that stand for something, they are willing to pay more for it, they are willing to select the companies they want to work for based on those who have a more responsible social profile.
“Companies would be well-served to jump on that bandwagon and to start to take the initiative at the level that is needed. Those that don’t, I think, are already heading to the graveyard of dinosaurs.”
Ex-Whole Foods boss Robb: Purpose is the differentiator retailers need to compete
Former Whole Foods boss Walter Robb hammered home the importance of purpose for retailers, singling it out as “the differentiator you need to compete in the market today”.
Robb, who co-led the US grocery chain with John Mackey between 2010 and 2017, when it was sold to Amazon, said the world was at “a moment that calls for more purpose” amid the Covid-19 pandemic and the war in Ukraine.
“I don’t think there’s anything more important than really understanding your purpose,” Robb said. “Purpose is the ultimate dashboard question you can use at any point in your life: Why are you here? What is the purpose, what is the reason you are in business? You are going to make money, but that’s a by-product of your purpose. The purpose is the reason you exist.”
“Having a reason to be is ultimately the differentiator that you need to compete in the marketplace today”
Robb added: “Having a reason to be is ultimately the differentiator that you need to compete in the marketplace today.
“You don’t compete just by trying to earn money for your shareholders, you work to support all of the stakeholders in the business – your team members, your customers, the environment, your communities.
“This is a moment that calls for more purpose. We have a different set of problems right now than we had 30 years ago, which the retail industry faces along with everybody else, whether it’s inflation, whether it’s the labour shortage, whether it’s automation, whether it’s the war in Ukraine.
“What Covid revealed is that humanity matters. How are you going to answer the bell around how you think about people?”
Despite those myriad challenges facing retail, Robb insisted the industry will respond.
“These are momentous times for retailers,” he said. “We used to be four walls, a box, put an apron on and off we go – it’s not like that any more, it’s very difficult. We’ve always risen to the occasion and I’m sure we will again now.”
BCG sustainability report reveals stark truth that retail may not hit green goals
A report by BCG and World Retail Congress has indicated that less than 20% of retailers are on track to meet their sustainability targets.
The Sustainability In Retail Is Possible – But There’s Work To Be Done report surveyed 37 major retailers worldwide across all sectors and found the majority are lacking the strategy behind their goals.
Around 70% agreed sustainability was a priority for their boards and executive teams, with all agreeing that sustainability was likely to be a huge growth driver over the next decade.
Fifty-seven per cent said they believed their businesses had invested sufficiently over the past three to five years to achieve their goals.
Less than 20% of retailers claimed to be on track to achieve their Scope 3 emissions targets
However, many respondents were placing too much focus on reducing their Scope 1 and 2 emissions, with Scope 3 targets out of reach. The latter make up the biggest part of retailer emissions.
Forty per cent of retailers said they were on track to meet Scope 1 and 2 targets but less than 20% claimed to be on track to achieve Scope 3.
This calls into question whether retailers will be able to help achieve the 1.5°C goal set out in the Paris Agreement in 2015.
WRC chair Ian McGarrigle said: “As the industry moves in the direction of greater sustainability, a focus on progress, rather than perfection, will be critical.”
BCG managing director, partner and co-author of the report Shalini Unnikrishnan added: “There may be an inclination to wait for perfect data on sustainability drivers and constraints before starting to act, but that would be a mistake.
“Companies in the very early stages of their journey should focus on small steps and quick wins. Together, these will drive steady and meaningful change that creates significant value for both individual players and the industry.”
Made.com chair Given: Experience ‘no longer valuable’ in retail boardrooms
Made.com and Hush chair Susanne Given has insisted that past retail experience in boardrooms is “no longer valuable” amid the rapid pace of change impacting the industry.
Given, who also served on the board of Morrisons prior to its acquisition by CD&R, made the bold claim as she encouraged boards to drive diversity and inclusion.
“One of the pushbacks you are often faced with in a boardroom is ‘we don’t get enough candidates’ or ‘we can’t apply positive bias’. Why can’t you apply positive bias?” Given said.
"If we don’t change our boards to be diverse and we don’t get a different experience into the boardroom... the people around the table will be using the rear-view mirror. That is not going to set up any business for success"
“We have been through – I’m talking in bold strokes here – 20 or 30 years where the bias in the boardroom has been: ‘I’ve worked with this guy before, I trust him, he’s great, I’m going to put him onto this next board’. The reality is we’ve applied positive bias for decades.
“That made some sense in the past because the rear-view mirror was really useful – the financial model was predictable, so having people with deep experience of the sector in which we were operating was really valuable. But we are in a different place today. Experience is no longer valuable, frankly, because the landscape ahead is hugely opaque.”
Given added: “If we don’t change our boards to be diverse and we don’t get a different experience into the boardroom – something that is relevant, something that is current, something that relates to all of these massive changes going on in our society – the people around the table will be using the rear-view mirror. That is not going to set up any business for success.”
Apple legend Ron Johnson: Retail’s ‘tired middle ground’ won’t exist in 20 years
Former Apple executive Ron Johnson believes “tired” retail stores will cease to exist within the next two decades.
Johnson – who during his time as Apple’s head of retail operations was responsible for rolling out the tech giant’s physical stores and Genius Bar concept – said the physical locations of the future will have to fall into two categories in order to survive: experience or convenience.
“I think we’ll have two types of stores: there will be super-fast convenient stores and there will be great experiential stores. Anything in the middle won’t survive”
“I’m a believer in the four walls of a store – we’re always going to have stores. The thing we won’t have is bad stores,” Johnson told the audience on day one in Rome.
“I think we’ll have two types of stores: there will be super-fast convenient stores and there will be great experiential stores. Anything in the middle won’t survive.
“If you go out and shop today and you wait in line for people, or the point of sale isn’t working, or the store is a mess, you’re asking yourself: ‘Why did I come to the store? Why didn’t I buy it online?’ On the other hand, if you go to a place and have a great experience, you go: ‘Why did I buy online?’
“The idea of tired retail, which isn’t modern and isn’t fresh, is what doesn’t work – those are the stores that won’t renew their leases. So you’ll have great retail, or you’ll have great convenience, but I don’t think there will be a middle ground in 10 or 20 years.”
Watch: Chip Bergh, president and chief executive, Levi's
Nike to bring new Rise format to Westfield London
Nike has chosen Westfield London as the location for its first Rise concept store in Europe.
The sportswear giant’s vice president of EMEA for Nike Direct, Cathy Sparks, revealed the planned opening during her keynote session on day two of World Retail Congress.
The Nike Rise concept is designed to be a more “immersive” store concept, which better bridges the physical and digital divide, and intrinsically links to its host city.
Nike has already opened Rise locations in Seoul and New York but this will be its first in Europe.
Sparks offered little by way of detail about the store’s proposition or its opening date. But she insisted that although Nike wants 40% of sales to be digital by 2025, physical stores will continue to play a “key role” in its future strategy.
Ikea exec Öncü: ‘Turn your biggest challenges into your biggest opportunities’
Ikea retail operations manager Tolga Öncü believes the secret to the furniture retailer’s global success is in viewing its obstacles in a different light.
“How do we continue to stay relevant? Our secret sits in turning our challenges into our greatest opportunities,” he said.
“While transforming our stores may seem new and different, change has been in our DNA since the beginning. We have always stayed curious and open to change.”
"If you want to make a change, you need to take responsibility. In the most important decade for mankind, we have decided to lead through action"
Öncü detailed three elements that are central to Ikea’s evolution: its omnichannel proposition; fulfilment possibilities; and sustainability mindset.
“It wasn’t long ago that stores were the only way for customers to buy from us,” he said.
“Customers used to have to drive out to the fields for an hour and come into a big blue box. Some people might have thought this was a challenge but these stores are actually our biggest opportunity to fulfil the customer needs and demands.”
The Swedish retail giant is piloting using its Finnish stores as delivery hubs, using the fact that those stores are within an hour’s drive of many customers to its advantage to power same- and next-day deliveries.
The business has also invested in new store formats, including city centre stores such as its Hammersmith branch that opened last month, as well as planning studios, click-and-collect points and lockers.
Ikea’s sustainability goals have become part and parcel of its overall strategy over the past few years as it seeks to offer “a complete sustainable, affordable home” to customers.
Öncü added: “If you want to make a change, you need to take responsibility. In the most important decade for mankind, we have decided to lead through action.”
Ikea has pledged to produce zero carbon emissions by 2025 and be climate positive by 2030.
‘Own your customer, don’t rent them’, says Shopify exec
Shopify executive Shimona Mehta urged retailers and brands to invest in their digital “community” in order to “own your customer, not to rent them”.
Mehta cautioned that some retailers may need to “tear down the tech stack” and rethink their digital marketing approach to build more meaningful, multichannel relationships with shoppers and collect more valuable data.
“The world of online advertising has changed over the last year – that efficiency of Facebook and Google advertising has gone,” Mehta said. “Instead, direct-to-consumer brands need to look at investing in community, which is harder. It requires deep, micro-understanding.
“For retailers, it’s about ensuring that you are building a unified, connected platform that allows you to own your customer and not to rent them.
“Data and deeply understanding your customer journey is the foundation of everything that you do moving forward because you need to be able to make fast decisions.”
Currys boss Baldock: ‘I’m bullish on the future of legacy retail – if it is done right’
“My name is Alex and I’m a retailer. So, why am I smiling?” Currys boss Alex Baldock started his keynote at World Retail Congress.
While Currys, like others, experiences demand, cost and competition headwinds, Baldock is positive the business can use its legacy status to its advantage.
“There are some headwinds that we all face and there are some that are just for us,” he said.
“I run a retailer that has been around for 130 years and I sell stuff – technology – that Amazon has been serious about and aggressive in for 25 years; yet here I still stand.
“Demand has been softening in retail – consumers are giving us less of their money, spending less on retail than they are on other things such as experiences, leisure and hospitality. In the UK, spend on retail has gone down from 15% to 13% in the last 30 years and there are more mouths to feed; a smaller cake and more people queuing up for a slice.”
Baldock detailed the ways that new entrants to the market are all upping the competition. Not only retailers such as Amazon but platforms like Instagram and Google, and companies such as Uber and Deliveroo, which have changed consumers' expectations on range, delivery times and price.
He added that while partnerships with these platforms in terms of marketing can be great, “if you have to pay a gatekeeper for access to a customer, whose customer is it anyway?”
Baldock is instead keen to use Currys’ legacy strengths to its advantage – namely, its wealth of expert colleagues and its store estate.
Currys has invested in ensuring its colleagues feel well trained, appreciated and looked after because “happy colleagues equals happy customers”.
Its ShopLive video shopping service also makes use of in-store colleagues offering a valuable service for customers while maximising colleague engagement.
Currys’ large store estate has also been crucial for it to compete on speed of delivery and click and collect, which has been reduced from next day to within 30 minutes. Baldock plans to reduce this to 15 minutes.
A trial partnership with Uber, meanwhile, means products can be delivered within an hour.
With sustainability in mind, Currys can leverage its scale and expertise to give longer life to products by offering repair services and recycling items that cannot be refurbished.
Baldock concluded: “There is a way [to win]. Yes, legacy retail can sometimes feel like running up a down escalator; there are more retailers fighting for a slice; Amazon is taking customers and dramatically raising their expectations – but it can be done.
“You can take a really strong bricks-and-mortar retailer, add online, add services and make a really strong omnichannel retailer. That’s why I’m smiling today. Building on legacy can win.”
JLP deputy chair Rita Clifton on how to beat Amazon
John Lewis Partnership deputy chair Rita Clifton believes retailers can no longer afford to pigeon-hole themselves simply as sellers of stuff if they are to succeed in the age of Amazon.
Brand guru Clifton warned it is “unhelpful” for businesses to be “category bound”. They should instead think more holistically about how they “wrap themselves around their customers” through a broader proposition.
“It’s very unhelpful to be category bound, to limit yourself to one category,” Clifton said. “What we are seeing from the most successful brands, irrespective of category, is that they don’t necessarily define themselves, they become ecosystem brands, wrap themselves around their customers and they happen to have a number of channels.
"Asos is a very good example of blending retail and editorial and products and services, and really making sure that you connect what customers are interested in"
“Amazon is the epitome of these ecosystem, life-editing, life-solution type brands, which pay no respect to categories.
“If there was one key lesson, whether you are coming from a retail background, or any other category background, it’s to think about your customer and your brand experience first, and how you are going to fulfil that later.”
Clifton described shopping on Amazon as “an incredibly functional experience” and suggested the way to “win” against the US etail titan was to “blend retail and editorial”.
She added: “If you think about Asos, for example, Asos is a very good example of blending retail and editorial and products and services, and really making sure that you connect what customers are interested in.
“Glossier is another example of a brand that actually started off as a community, with an interest in editorial first, then products and services second, but it has created a really engaged community. These are the ways you can win against behemoths, even while the behemoth is supplying other services.”
Retailers must ‘seduce’ customers on sustainability, says Ahold Delhaize boss
Ahold Delhaize executive Wouter Kolk believes retailers need to “seduce” rather than “teach” consumers on the benefits of sustainability and healthier eating in order to drive changes in shopping habits.
Kolk, who leads Ahold Delhaize’s businesses in Europe and Indonesia, shared the example of how the grocery giant changed how it merchandised soft drinks and sparked a shift among both shoppers and suppliers.
“I always find it funny when somebody says: ‘How do you teach the customer?’ The customer doesn’t want to be taught anything, you need to seduce them,” Kolk said.
"Without doing anything nasty, we moved customer behaviour and supplier behaviour in the right direction"
“We built a company planogram for drinks and we did it with sections for no sugar, a little bit of sugar and more sugar – white, orange and red. Guess what? Customers stopped buying the dark red, many of them moved to the orange ones and the white ones.
“So it’s not about forcing people, it’s not about discrimination. We just display and you make your choices. Customers love that; they love to be guided. And the other part of this is that suppliers did not want to be in the red zone, so they changed their recipes because they wanted to be in the orange zone and in a better position.
“Without doing anything nasty, we moved customer behaviour and supplier behaviour in the right direction.”
Ahold Delhaize has put sustainability front and centre of its strategy. The Dutch retailer is focusing its efforts on four main pillars: food waste, plastics, healthy sales and climate.
Kolk urged retailers to come up with “new creative solutions”, such as Ahold’s healthy meal boxes, to offer customers “healthier, easier and preferably cheaper” options at the shelf edge.
Kingfisher’s JJ van Oosten: ‘Delivery and choice are driving retail change’
Kingfisher chief customer and data officer JJ van Oosten believes a marketplace model with stores at the heart will set retailers up for future success.
“When I look at customers and what they want, they love speed and love choice,” he said.
“Many years ago, we were obsessed with doing grocery delivery at the time and day you want, but the vans were going off and coming back empty. Then we had next-day, same-day and now we even have one-hour delivery.”
While Kingfisher has invested in super-fast delivery options – its Screwfix Sprint service serves 30 UK cities, with more to come – the retailer ensures its vans are “never empty”, picking up goods on both legs of delivery journeys.
Kingfisher also launched its marketplace, DIY.com, last month.
“When it comes to choice, the marketplace model has been growing twice as fast as traditional ecommerce,” van Oosten explained.
“In the DIY sector, it has increased the size of the addressable market. There are more products readily available to more customers and it's easier for them to buy.
“We think that stores are perfectly positioned micro-fulfillment centres. Look at what’s happening in China with Hema Grocery, where you can have thousands of orders per day, delivered by mopeds that wait outside, and can be delivered in under 20 minutes.”
New Toys R Us owners on bringing the much-loved brand back from the brink
Millennials who grew up with Toys R Us, and now their children, rejoiced with the news that the retailer was acquired by rescue firm WHP Global in 2021, and its stores would be returning to Western markets.
To bring the toy retailer into the 21st century, WHP Global embarked on a mission to expand and return to new markets, open new stores, digitise the business and form retail partnerships.
WHP Global and Toys R Us chair and chief executive Yehuda Shmidman said: “Since we bought the brand 12 months ago, our mission has been crystal clear: it’s been about bringing back Toys R Us worldwide to those consumers who lost it.
"Our job is the easy part – we’re just putting it back together after the restructuring, which was just down to the capital structure. It was, and is, a great business"
“There were four initiatives we’ve put in place. The first was making the brand digitally ready for the 21st century. We launched an NFT collection to great fanfare as part of a complete overhaul of our digital strategy, leaning into the nostalgia of the brand and delivering it back to consumers to re-engage with their childhood memories of their Toys R Us experiences.”
Toys R Us has remastered its famous theme tune and used its mascot, Geoffrey the giraffe, in social media posts and the NFTs.
“Secondly, we looked to fill the gaps around the world. One of the great things about the restructuring in 2018 was that a great many of the stores in Asia and the Middle East did not close, but we needed to plug where those gaps were, bringing stores to India and the UK,” Shmidman said.
In the US, where Toys R Us was founded in 1948, the brand has opened a flagship in the American Dream mall, New Jersey, complete with an ice cream cafe and slide.
It has also partnered with department store chain Macy’s to open 400 concessions in stores across the US, which will grow Macy’s toys category fivefold.
In doing this, Toys R Us stores will increase by 50% to more than 1,400 in 2022 – indicating WHP Global’s belief in the iconic brand’s legacy.
“Toys R Us was already a proven concept,” Shmidman said.
“Our job is the easy part – we’re just putting it back together after the restructuring, which was just down to the capital structure. It was, and is, a great business.
“You could ask why aren’t we doing this all faster – there are parts of the world we haven’t talked about yet such as Germany, France and airport stores. There’s a lot more for us to do but it couldn’t happen sooner.”
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