Ian McGarrigle, founder and chairman of the World Retail Congress, joined The Retail Exchange podcast host, Ben Bland at NRF's Bg Show in January to talk retail in 2018, the rise of online and challenges for bricks & mortar retailers.
BB. What in your view lies ahead for retail in 2018, and what is there that we can get really excited about?
IM. I think the big issue, and has been for a little while, is just the enormous change and the transformation that retail has to undergo. We are seeing it happening and it’s been building up over the last two or three years where retailers have understood that their business model has to change. The rise of online Amazon and AliBaba in Asia has really focused minds and I think we've seen that sort of tipping point in the last year or two where the online players are really starting to make a difference. And we've seen it again this last Christmas season, particularly in the UK and here in the States, where the online players just sort of continue to build market share, eating into traditional retail. If you're going to survive, you can't just do nothing, and we've certainly heard it from Doug McMillan, Walmart [at NRF's Big Show], where he said, every associate in the business knows that the mantra is about change; everything has to be looked at. So, I think for me, in answer to your question, I think that’s an ongoing theme that we are going to see; the retailers that are serious about surviving and creating a new offer in many cases that consumers are going to want to buy from, it’s going to be about, in many cases, quite a radical change to how they look and operate to serve the customer.
BB. Knowing that change is necessary is one thing, actually rising to that challenge is another. Do you think across the board, retail is rising to the challenge of transforming and meeting the needs of customers in 2018?
IM. It’s a really interesting question and you would like to think that, yes, they all would, but it does pull you up sharp. We did some research at the World Retail Congress last year and we asked senior retailers just that, about what needs to change in the industry and what are they doing about it. Everyone was really taken aback that yes, universally everyone knows what needs to be done but I think the stat was 52 per cent hadn’t even started that journey, if you can call it that. So that is quite shocking!
BB. And making those big changes in the way that retail responds to changing customer demands and needs, where do you think the biggest challenge lies, especially for large organisations and are there any examples that you’ve seen of a big organisation actually doing it very well?
Well, you used the phrase ‘large organisation’ – I think the clue is in that phrase. IThis is trying to sort of turn around an ocean-going liner; you can put the brakes on and it takes a long while for the boat to stop, but when operating a big, huge organisation with thousands of employees, that’s no easy thing to do. So, I think at the heart of a lot of the issues that retailers face, it’s managing that change and bringing people along right across the business and seeing them buy into the vision and hope that it’s the right vision that the business has to go, but of course, that’s just part of it. If you're an established retailer with hundreds, maybe even thousands of stores, that’s no easy thing to assess that and make tough decisions about closures which we are seeing a lot of, that's a big structural change that retailers have to battle with.
BB. Retail is not alone in having to respond to these big changes in society, I mean, the motor industry, the energy industry, just to name two others – how much do you think retail can learn from other sectors and what do they do that retail could perhaps do better?
IM. I think you're right and again it’s a really good point. I think this theme of change within retail isn't alone, it’s happening right across the board and some business sectors have faced that change, like the travel industry, much, much earlier, with online taking away traditional business there, so I think you're absolutely right, it’s something we at the World Retail Congress constantly get asked for it, which is interesting that they want to hear from related consumer-facing sectors, whether it’s food and beverage, hotel sectors, travel, entertainment, media – because all of those sectors are trying to find a new way of connecting with the consumer when the traditional channels, the traditional routes no longer prevail. So, there are lots that retailers need to be more open-minded about to learn from different sectors.
BB. What do you think, on a strategic view, the dominant themes will be for retail in 2018?
IM. Obviously aside from change, I think it’s trying to find a new way of blending and recognising which technologies are going to make big change. I think everyone recognises that technology is really important but I think you also get a sense that it’s a really tough thing for retailers to do, they’ve got finite resources, where do you place your bets, which technologies, which are changing so fast, are going to make the real difference? I think there's that aspect there that’s going to be a prevailing, ongoing theme. But within that technology area, the thing that people talk about is machine learning, artificial intelligence, robotics – these are almost sort of science fiction-like technologies that are here and now. And the thing that we hear from technology companies is to try and persuade retailers, if they are scared of it, not to be scared of it but to embrace it because it can really help drive efficiency within the business and that’s just not about lowering numbers of people in the business, but it’s about how can you make the business more efficient to actually help your customers – make the customer experience more seamless, more enjoyable, faster in responding. But for me, also, something we pick up, it’s almost rediscovering that emotional side of what retailing is. So I think yes, we have to be almost obsessed by the technology that’s going to and can enable change within the business, but I see a sort of underlying beginning of a theme in conversations I have and others on the team have, about let's think about what retail exists to be – and it is about selling product to customers and persuading them, maybe they didn’t even know that they wanted it, but retail is that emotional connection. So how can you rediscover those sort of, shop-keeping skills selling products, and that can be online but it’s really reinventing that physical space and even if you’ve got less people in the store but those people that are in the store should be absolutely brilliant, they should love to serve people, really understand the brand and the product that they’ve got.
BB. I just wonder whether you perhaps think, from what you’ve said just there, that bricks and mortar stores are missing a trick by going after the technology and not making much more of the advantage they have over online sites, which is, they have humans at the heart of the customer experience, and actually, as people, we relate far more to someone talking to us about the products that we are buying, face to face, telling us about it, telling us how good we look in it even?
IM. I think we've almost got to that point where established retailers are now almost frightened by the online players and try to emulate them as they chase the technology and you can see it in many retailers that – I won't name where – you can see the cutbacks that have been made in store, people are talking a good game about, we need fewer stores and the stores we have will be flagships, but not really seeing evidence of that yet, but the really good retailers, they’ve got great people, in the business and it’s, how do you make that really stick and when people walk into a store, they should be just blown away with the experience from the humans, as you say, in the business that really bring to life a brand.
BB. Ian, we are delighted to have you on the Retail Exchange Podcast. Obviously people can listen to this anywhere in the world, and you are quite uniquely placed as Chairman of the World Retail Congress, to give them a sort of global view if you like. Where you feel the innovation and the rising to the challenge of change that’s needed – where in the world, which regions is it being done best?
IM. Well, I think certainly a decade ago and certainly a bit longer than that you would without a doubt say it’s America and Europe; the UK in particular has always been seen as a sort of leading, cutting edge, market in terms of its retail and to many an extent, that’s still true. For me, Asia, particularly China, is all that we see, or read and hear about; they are really I think setting the pace. The big online players in China, particularly AliBaba and JD.com, seem to have really understood the marrying of technology, but it’s technology as an enabler, and what it enables you to do is really connect with your customers and just how their understanding how consumers, particularly Asia and as I said, predominantly China, where it’s all mobile-enabled but it’s using the mobile to enhance the retail experience, create new retail experiences. AliBaba like Amazon is buying stores, so it’s that interesting reconnecting and building a new route forwards, but what they're doing is reinventing the physical space too. It’s the way you use mobile, the way you use technology to create a customer experience.
BB. Just looking ahead to the World Retail Congress 2018, what do you think the mood is going to be and what are the themes that you're anticipating will emerge predominantly through that?
IM. I think what's interesting at the moment, and we’re here at the NRF in New York where they’ve just reported some pretty good holiday numbers, and I think there's a buoyancy back in US retail that I haven’t detected for a little while, I don’t know how long that will go for, but I think the signs are pretty good. My sense is that retail is grappling with this transformation and that’s really quite rightly obsessing retailers but in many markets, I would unfortunately say that the UK is probably the exception at the moment where it doesn’t have the benefit of that underlying retail sales growth that we are seeing in the rest of Europe or we’re seeing in the US, so I think there's going to be a bit of a conflict, almost, there with the mood.
BB. So do you think that has an impact on the appetite to embrace change and do things that are new and perhaps risky, given the figures that you’ve just mentioned in the UK?
IM. Back in the old days, not so far ago, if retail sales were tough, people would hunker down, as they say, and just make tough decisions, make cuts – that’s just not an option now. The mood I detect, particularly in the UK where it is really tough, is right, what are we going to do about it, we can't just do the traditional thing of cutting back numbers and just holding your breath and waiting for the storm to pass – the storm is a perfect storm. You’ve got to change the business because if you don’t do anything now to come through where we are in terms of if there's a wobble on consumer confidence and spending, if you just wait for it to pass, you won't be in any fit state when you’ve got big, really lean online players and smaller really clever ones like Misguided and Boohoo taking away your business so that isn't an option.
BB. If I can just get you to cast your mind forward to later this year, final day of the World Retail Congress, you're exhausted, it’s been a busy time, you’ve spoken to many people and you're sitting back and taking stock of it all, what to you would mark a successful WRC 2018?
IM. The thing we've worked harder and harder on in recent years as the industry’s become more challenged is that I think there used to be an adage that if you could send people away with one great idea for the business, you’ve done a great job. We've realised for the last two or three years that we have to do more than that. I think success for me is when we get that buzz, when we get that feedback from people saying, wow, I've heard several ideas, I'm going to take all these back, my book is full of ideas, I've made great connections and as they do, often, say thank you for that presentation, that piece of research because that really helped clear my mind and give me some clarity on what we need to do. That’s the buzz that I get when you get that sort of feedback.
BB. And just finally, your impressions of NRF – I'm not sure how many times you’ve been to the Big Show…
IM. Quite a few years… It’s incredible, it just feels like it gets bigger and bigger and I think, going back to our earlier point about the importance of technology, I mean, literally it buzzes here with the technology that is changing retail and we are a global event but we work closely within NRF, they're a partner of ours. We've worked closely together, but this is equally a truly international gathering and when you just see retailers from all over the world wanting to learn and exchange ideas, every year I come you get that incredible buzz from it.
Listen to this interview and others at the Retail Exchange podcast website here.