Retail. The West delays whilst the East is innovating
From Hong Kong to the Emirates, the retail of tomorrow is being invented in the Far East. Where business has reopened, retailers and property companies are charting a new course. Business practices and trends are in place that would astonish the old guard 3 months ago.
Asia and the Emirates are one step ahead in the global health crisis, and for retailers, showing how to initially manage the aftermath. Whilst Europe and the U.S.A. are protecting themselves with restrictive health measures while trying to hold on to loans, others are inventing the retail of tomorrow. We examine how the battle lines are shifting.
Omnichannel is no longer optional. For those who have delayed implementation, the market players show this is THE short-term priority. An example is the fashion sector. Front line retailers receive a million pieces from Asia and deliver more than 90% to stores for sale, with only a small number of products held for the e-commerce warehouse. By redirecting products already in a store to be sold via e-commerce, retailers satisfy customer demand even if the item is not in a warehouse. Historically, this was “out of stock”, whereas now margins improve. The proof of this flexibility is the ability to quickly invest in omnichannel projects. Driss Iziki, Sales Manager Africa-Middle East at Cegid Group, said, “3 months ago, customers were telling our consultants “Your idea to deliver from a from store is quite good.” Today they tell us “We want to implement this immediately.” He added, “In beauty, home decoration and D.I.Y., our retail operational clients are highly attuned to digital solutions. The difference in listening to their appreciation of technology is mind-boggling. Some are really stuck but are able to decide very quickly on IT projects that will generate turnover and cash in the next 6 months”. This pure omnichannel shift is not simple. “Stores have converted completely to process ‘ship from store’, but for staff, it’s not that simple,” says Guillaume Darrasse, C.E.O. of Invivo Retail (Gamm Vert and Jardiland garden centres). “You tell the staff you had recruited for their sales and customer relations skills to switch to running a warehouse job. They are now measured by flow management objectives (number of orders prepared / hour). It’s no longer the same job”. Another proof of this resolutely multi-channel retailing is in the market at Maghreb, where many franchisees are asking Head Office to give them control of e-commerce. The franchisee of 1.2.3. and Etam in Morocco want to take over e-commerce activity, previously managed by a parent company. This is a strong sign in a country where online sales have been underdeveloped.