This document discusses retail strategies for the future. It notes that while footfall is dropping in stores, digital commerce and factory outlets are growing. It emphasizes that to be successful in the future, retailers need to focus on creating excellent omnichannel experiences for customers and use data intelligence to personalize the shopping experience. Retailers also need to rethink their approach and work together across the industry to adapt to changes and ensure long term viability.
What is the future of retail? Will physical retail survive to ecommerce? Opening a store is still a good business idea?
My name is LM and I bumped my head on these question for some while, I have been leading large international retail organizations all along my career.
I am now the Vice President of Levi’s Strauss for Central Europe.
Before we start this talk today let me introduce you Levi’s with this video.
VIDEO PLAYING
We are the largest global denim retailer in the world, in Europe we have opened a store every week for the past 5 years
In total 19 owned and operated stores in Belgium
17 ML/2 FO
7 potential whitespots – only ML, no further FO
Very selective expansion – we only open a new store when
it is part of our expansion plan, having the right connditions
and format (150sqm) and when located in the best spot
8 new store openings within the last 3years
Ongoing refits of shop concept within the last 3 years
To say that shopping has undergone a revolution in recent years is an understatement — and it’s especially exciting to see consumers more empowered than ever before.
The rapidly evolving retail dynamics present in the apparel industry — namely the influence of mobile devices on the shopping experience — continue to create unprecedented opportunities to connect with consumers. Shoppers expect a seamless experience across all brand touchpoints. Nearly half of our online traffic are consumers researching an in-store purchase, and in our stores, we see purchase intent and conversion is on the rise.
Simply put, we want to be wherever and whenever the consumer loves to shop. For us, that means an investment in our direct-to-consumer channels — mainline, outlet, ecommerce and franchise — especially the expansion of our retail store network and the enhancement of our ecommerce capabilities. Last year, these investments resulted in double-digit growth in the direct-to-consumer business (18% reported/16% constant currency), marking 11 consecutive quarters of double-digit growth.
Let me take a minute to share few thought about the great results of the biggest FO villagers. People may think that outelts are doing well because the sell product with a lower price, the discount is explaining their success. Well price is a component but I believe it is not the real reason.
Going to the roots of this success can help us find ideas to the rest of retail.
We know that the average ticket in outlets is as high as in full price stores. Money is not an absolute constraint. The element of getting a bargain is there but more important FO villages offer an experience that is much better than shopping in a city center or in a mall.
Curated shopping, Variety of shops, pedestrian streets, clean, environment. There is no trash, no beggars. A peaceful and harmonious architecture. It is a sort of a Truman show, faking an ideal world that is giving a break vs the challenges, the ugliness, the social diversity that it seems this society does not want to see or accept.
EXPERIENCE DRIVEN ECONOMICALLY VIABLE
One day out experience free parking
Pedestrian Price advantageous
Entertaining for the family Synergies to generate traffic % rent Marketing engine
Space conditions
So what about the rest of retail?
The only thing I am sure about is that change is necessary if retailers want to win. And I believe there will be more retail and less retailers.
More retail business, less retailers able to play.
Simply because embracing change is difficult. Not everybody is ready and with the speed of change we see waiting too much is a lethal error.
Strategically in Levi’s we see 2 ways to compete
The first is to invest in technology and Data intelligence
We see it with our own friends and family, especially millennials – they see something on Instagram, search to find it online, check the reviews and compare prices. In just a few clicks they have bought it. Today’s consumer doesn’t stop to think about channels or venues; she uses the Internet to find what she wants and then picks the easiest way to get it. With all that available information and with different ways to buy, it’s critical that we present her with a seamless, branded approach across all channels.
Today’s consumer shops where she wants, when she wants, using any device: jumping between online and offline to make purchases and pick up merchandise.
77% of people go on mobile phone when not busy
52% check phone every 30’
55% buy from mobile
And we’re investing in new technologies to make this as simple and engaging as possible for our consumers.
Opening an on line, shop offering easy check outs, analyse consumers behaviors on line and offline, connect all the online shopping with stores:
All this comes with huge cost in IT.
The second route is Experience.
Creating something that can not be replicated.
The new KPI becomes experience per sqm.
Bringing high touch human interaction to transmit your Brand values in a different and human way.
This is our store in Koln, as you can see there is a large space dedicated to a tailor station…, a print bar to print your own personalized levis t-s, and an atelier.
One of the values of Levi’s is craftmanship so we decided to open tailor points in almost 130 stores in Europe and to offer this service.
In this particular store format we have made it big, because this store is also the hub for other stores in the same region.
We have a dedicated marketing manager in the store who is checking what is interesting for the Koln community and organize events in the store
TED talks
Concerts
Sewing lessons
Thanks to the digital technology will be soon possible to connect what is happening in 1 store like this where we have the space to all other smaller stores.
As you can imagine these are significant investments, that are impacting profitability of the stores.
Not many players will be able to invest in technology or experience and will have to pick a lane or disappear
On the other side the health of retailers is in the interest of a much larger group of stakeholders.
Having successful retailers in our cities is in the interest not only of the Brands but is in the interest of the cities themselves, of the landlords, of the architect and designers, of the communities that are living in those cities. The whole ecosystem will need to change
I would like to conclude with one thought: I believe the success of retail in the future will depend on all these players finding new solutions in partnership rather than maximizing each individual best interest.
Thank you