3 | From Retail to “Me-tail”: Tomorrow Starts TodayTomorrow’s consumers willbe armed—and dangerous.
From Retail to “Me-tail”: Tomorrow Starts Today | 3As power moves inexorably from seller to buyer andretailing morphs into “Me-tailing”, retail organizationswill need much more than customer centricity and supplychain optimization to achieve high performance.Today’s consumers are demanding. • Consumers will be able to shopBut tomorrow’s consumers will be seamlessly across multiple channels—armed—and dangerous. Empowered and expect to find relevant contentby technology for unprecedented on all of themchoice, they will demand productsand services that meet a constantly • “Fast fashion” will be the de factoshifting kaleidoscope of expectations, industry standard—with dramaticfrom convenience and affordability to a consequences for store inventorycustomized experience and sustainable levelssourcing. They will expect to access • Supply chains will be optimizedproducts and services from just about across the full product lifecycle—rightanywhere and at pretty much any through to disposaltime. And in their quest for instantgratification they will totally transform • Consumers themselves will help formthe retail industry. the communities of talent required to service a vast diversity of new and• Stores as we know them will no longer constantly shifting demands be relevant—many shoppers will never even visit one
4 | From Retail to “Me-tail”: Tomorrow Starts Today Stores as we know them will no longer be relevant—many shoppers will never even visit oneSome stores will focus In the future, the sheer diversity of both People who actually bother to visit a shoppers and shopping trips will require physical retail space will be in searchon the time-starved, a multiplicity of formats, each tailored of an enjoyable and entertainingothers on the “green” to a specific local market. The name “experience”. They may patronize book- of the store game will be precision stores where they can meet stimulatingconsumer—and some retailing. And successful stores will be authors, for example, or toy stores thatstores will simply be those that leverage their closeness to let kids interact with their favoriteshowrooms. customers to interpret demand signals— toys and games, while in-store experts, and swiftly act on them. both real and virtual, answer parents’ questions. Some stores will focus on the time- starved, others on the “green” Today’s shoppers are more than consumer. Some will simply be ready for the mobile and interactive showrooms—like, for example, Vogue technologies that can deliver this level magazine’s twist on pop-up retail, of experience. Consider, for example, which allows visitors to try on items that almost three quarters of Europeans from the racks of clothes on display, responding to a recent Accenture receive advice from stylists and sample survey said they would use mobile products from the perfume bar or phones in-store for product information make-up station. The store space sells scanning; and more than half agreed nothing—but the information that that being able to interact with an attentive store staff can derive about online product expert while in store customers’ preferences could prove would save them time. invaluable to future sales prospects.
From Retail to “Me-tail”: Tomorrow Starts Today | 5Consumers will shop seamlessly across multiplechannels—and expect to find relevant contenton all of themToday’s consumers already enjoy 24/7 experiences from a variety of locations its customers to buy products from theirpurchasing power, as well as almost and via a diversity of channels, camera phones. Dominos’ customerstotal transparency over transactions. effectively “editing” their product can order pizzas from the TV, as wellAnd they are beginning to abandon choices. And if a product fails to fulfill as through cell phone apps and viaproduct “ownership” in favor of a their expectations—if that shirt they Facebook. Staples Canada print shop“leasing lifestyle”, characterized by a spotted someone wearing on the street uses experts channelled in, on-demand,footloose quest for access to fewer or online turns out not to have been to help the customer define the printitems closer to the point of need. manufactured according to the exact job, mock up samples and place orders— environmental and ethical standards an innovation that has also helpedIn the future, Internet penetration of their social networking group, for Staples expand their offering into morewill turn this multi-channel lifestyle, instance—they will search the product locations by solving a basic challengenow mostly enjoyed by the so-called comparison websites or consult their in retailing—cost effectively providingMillenial generation, born since 1980, networked “friends” worldwide for a each customer with the right expertiseinto a global phenomenon. And this, better value proposition elsewhere. and personalized service at the momentof course, spells huge opportunities of customer need. And one high-endfor start-ups, which we call “wildfire Leading retailers are already looking to apparel maker offers online buyers whoniches” because of the speed with capture increasingly elusive customers can’t find the exact item they are lookingwhich we expect them to spread- in imaginative ways. Consider the for a close match—at a significantempowered by new technologies success of Zlio, for example, an online discount, which is also on offer to theirand serving a diversity of customer site that invites visitors to “create networked friends.segments. your own store” by selecting products from hundreds of Internet merchants,Interconnected and using a single and earning money on each sale. Themobile device, do-it-yourself retail Swedish fast fashion giant H&M allows“grazers” will be able to configure their
6 | From Retail to “Me-tail”: Tomorrow Starts TodayThe lifecycle of products willbe significantly shorter, makingproduct innovation an evenmore critical differentiatorof high performance.
From Retail to “Me-tail”: Tomorrow Starts Today | 7“Fast fashion” will be the de facto industrystandard—with dramatic consequences forstore inventory levelsIn the future, the lifecycle of In the future, the retail supply chain basics. It will separate and streamlineproducts will be significantly shorter, will be predicated on inventory arriving the design function, encouragingmaking product innovation an even at the store shelf just as need arises. timely and accurate handoffs betweenmore critical differentiator of high Replenishment orders will be placed design and production. Production leadperformance. “Fast fashion”, in fact, and released on regular cycles—typically times should drop, thanks to the highwill be the dominant business model— weekly or more. Lead times for domestic utilization of common components. Andnot just in apparel and consumer suppliers will be measured in hours or vendor partnerships should strengthen.electronics, where it is already evident, days. And forecasting, planning andbut also in all other retail categories. replenishment systems will support Some leading retailers are already real-time allocations and store need leveraging consumer insight to moveFast fashion will also necessitate more inventory management techniques— in the fast fashion direction. Witnesssupple supply chains—a challenge for innovations that Accenture estimates the move by Target, the US-basedmany. According to Miami-based Retail will reduce in-store inventory by one general merchandise retailer, toSystems Research, forecast does not third or more. expand its fast fashion concept frommatch demand for most retailers. The apparel to gardening, home decor andproliferation of stock keeping units The benefits of a successful fast kitchenware. In the future, they will(SKUs) means that retailers are trying fashion business model are numerous. be able to combine this insight withto edit a constantly increasing number Customers will see a visible difference deep analytical capabilities to identifyof choices to stay relevant for the on the store floor, inducing them to the specific attributes of each product,consumer. And Accenture estimates make more visits and thus boosting determine its value to individualthat many are making more than 80 revenues. And a faster response to consumers and target assortments, thuspercent of their inventory investments sales data will help boost production customizing individual offerings. What’sin store—an untenable situation with efficiency, fuelling sales and reducing more, fast-moving products will bereal estate costs steadily rising and markdowns. The model will help ensure stocked in smaller formats like vendingretail space in increasingly short supply. full in-stock assortment for the hottest machines or kiosks, which are not only selling items and high in-stock rates on more convenient for consumers but also more cost-effective for retailers.
8 | From Retail to “Me-tail”: Tomorrow Starts TodaySupply chains will be optimized across the fullproduct lifecycle—right through to disposalFuture resources will be even scarcer when consumers will be able to stop by in logistics, and supply chainthan they are today, and consumers “refresh and refill” window chutes, stock specialization and segmentation will becorrespondingly more value- up on basics and use mobile devices to commonplace—though a proliferation ofconscious. Shoppers will take on more pay for them. distribution points will also necessitateresponsibility for reducing packaging shared logistics and other forms of Resource constraints are changing collaboration. Consider the case ofand irresponsible production. But they behaviors already—and not just Meadowhall, a large mall in the UK,will not be prepared to bear the full cost in Europe and the US, where the which has teamed with Clipper Logisticsof sustainability. Retailers will need to quest for sustainable products and to manage an on-site distribution centerinstitute cost-effective sustainability environmentally responsible services that holds inventory for all stores in thestrategies of their own. And a supply has spawned a whole new sub-sector: mall. The collaboration has cut in-storechain optimized across the full product Organic grocery. In Brazil, for example, inventories, shrunk the mall’s carbonlifecycle, right through to disposal, will Pão de Açúcar, the country’s biggest footprint—and boosted sales by up to 10be critically important to that effort. food retailer, has responded to shoppers’ percent in some categories.The reusable and recyclable “bags growing concerns with ”green” storesfor life” now issued by retail grocers that use 10 percent less water and 14including Tesco and Whole Foods percent less energy.Market, for example, will eventually Retail will also need to become aevolve into refillable containers. We more collaborative industry. Individualare already seeing the spread of rent retailers will recognize the value ofand return, from high-end handbags greater specialization, particularlyto children’s toys. And we envisiona time in the not too distant future
From Retail to “Me-tail”: Tomorrow Starts Today | 9Consumers themselves willhelp form communities ofservice talentIn the future, consumer demands will be outsourcing for talent, a significant Consumer demands willso diverse and complex that no single portion of which will be mobile, movingorganization will be able to cater to all from retailer to retailer. And the be so diverse and complexof them. Individual retailers will need to development of “communities of talent” that no single organizationfunction more like agents. Consumers will involve employees working for will be able to cater towill look to them to “broker” products multiple companies, sometimes, thanksand channels. And that will spur many to open sourcing, simultaneously. all of them.retailers to join together in strategicalliances, often with companies in Google and Procter & Gamble haveother industries, most of which also swapped employees on a temporarywant to “own” the consumer. Witness, basis so that they can learn fromfor example, how the UK retail grocer each other. And Japan’s OtetsudaiTesco has evolved into an aggregator Networks allows anyone to registerof incremental products and services for employment by filling in coreranging from Tesco Finance (a joint skills. Employers with short-term laborventure with Bank of Scotland), through needs can enter a task description andTesco Mobile (with O2) to Tesco Travel, matching registrants near the locationwhich is powered by LastMinute.com. who are available receive an alert to respond.The key demand will be for the sort ofspecialized, knowledge-based talent thatcan create value beyond distribution.That talent, moreover, will come fromsome unlikely sources—customersamong them. Companies will start
10 | From Retail to “Me-tail”: Tomorrow Starts Today Paths to high performance Accenture research and experience unique value proposition and adapt clearly show that Me-tailing, for all its their brand to changing formats and challenges, also heralds exciting new their workforce to new skills will be able opportunities for retail organizations to position themselves well ahead of to achieve profitable growth and high the game. To find out how Accenture performance. Success will require can help you prepare for the Me-tail extraordinary collaborative skills, as well revolution, please contact: as even clearer differentiation and much greater flexibility. It will also require Janet L. Hoffman retailers to demonstrate exceptional Global Managing Director, customer centricity and total mastery Accenture Retail Group of rapidly emerging technologies. San Francisco, California, US Nevertheless, those that can define a firstname.lastname@example.org Renee V. Sang Global Director, Accenture Customer Innovation Network; Senior Executive, Accenture Retail and Consumer Goods Chicago, Illinois, US email@example.com
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