Aoife Kinsella delivers her third and final feature on the highlights from this year’s Global DIY Summit that took place in Dublin in June.
While Day One of the Summit covered Innovation and Digitisation, Day Two offered a look at how the Asian market is changing the face of retail, and a farewell session looking at
future trends in the global DIY market.
Challenging Innovation Trends in Asian Retail
The Asian retail market has proven to be a useful window into the future for the Western markets, having been an early adopter of technologies like QR codes and mobile technology which have become a new “normal” in everyday life.
Stephan Wirtz, Adjunct Professor EM Lyon, Shanghai Campus, began the topic by highlighting how the retail landscape in China differs from the Western and European retail landscape. In China there are still seven million “mom-and-pop stores”, which are characterised by small amounts of business volume and employment of family members.
Despite the changing retail landscape and the move to smart-shoppers and online shopping, these ‘kiosks’ still dominate the retail landscape outside of the big cities in China. “Consumers very high expectations have led to a stiffening in competition”, explained Wirtz, who then hypothesised that “China has reached a ceiling in e-commerce, and for future development in e-commerce to take place it will be necessary to digitalise these seven million “mom-and-pop” stores.”.
“This will further merge the physical and digital world.”, Wirtz continued. Further to this, mobile e-commerce will continue to prevail in China and is likely to gain traction in Europe too.
While Wirtz does not believe that the physical stores will die, he pointed out that to succeed these stores must now fully integrate the online and offline. With an increasing role of digital technology parcel deliveries will be faster, with 24-hour delivery expected everywhere in China by 2021, as well as grocers offering delivery times of 30 minutes. At
this stage China is a hotbed for innovation and technological advancement, with generally relaxed regulations in relation to other countries. These relaxed regulations promote innovation and experimentation.
UK and Europe DIY Market Update
Beginning the DIY Summit’s farewell session, exploring the latest trends in the global DIY market, was Neil Munz-Jones from research group mdj2, who declared that “the bar has
been raised” in the UK and European DIY markets. At the 2016 DIY Summit in Stockholm mjd2 predicted that not everyone would survive the brewing “perfect storm” in the hardware retail market. Since then there has been a decrease of growth in the retail sector as well as a move away from DIY and increased competition. “The customer is no longer king, because the customer is now the master of the universe!”, stated Munz-Jones. Innovation is key for retailers to remain competitive and combat rising business costs and the shift in power to the consumer.
Munz-Jones then presented the categories of winners that are succeeding in the market: B2B/B2C catalogue retailers, discounters, category specialists and pure players. A similar
characteristic that can be seen through all these winning forms is that they are connecting, evolving and giving customers choices.
An example of a successful B2B/B2C retailer that Munz-Jones presented was Screwfix, which has grown in the UK by 15% each year. Screwfix are clear who their target audience is, the pro-sector, and they work towards satisfying this type of customer. Munz-Jones presented their unofficial motto as “time = money”, as they know their customers are time constrained.
Screwfix have reacted to their customer’s time constraints by making sure that there is a Screwfix within a 10-minute drive in most cities. Further to this they offer an online-store with next day delivery as well as their 1-minute click and collect service.
Services are now the battleground in retail
Although after-sales services (such as delivery, installation and other services) don’t typically provide as profitable margins as other channels, they are important in building customer loyalty. Munz-Jones explained that customers (particularly in the newer generations) are now engaging in the values of a brand. It is important that brands connect with their customers emotionally and make themselves useful to the customer. They must also evolve in both the digital and physical sphere and make strategic choices.
Munz-Jones concluded his presentation by stating that the bar in retail has been raised, and keeps rising. It is up to individual retailers to see how they will respond, but according to Munz-Jones the key to success is to concentrate on “[doing] a few things brilliantly rather than many things averagely”.
Digital Room: New Trade of Retail
In a striking display of innovation the Russian retail group Petrovich (one of the Top 10 retailers in Russia) launched “the Digital Room”. This service, consisting of 16 LED screens,
allows customers to design and renovate their room around themselves, offering them an immersive experience around the Petrovich brand. This is putting customers back in the
driving seat and giving the control to them, relating to customer centricity which was covered on Day One of the Summit.
Igor Kolynin, Marketing Director at Petrovich, explained that this concept reflects the four reasons customers still visit physical stores: to communicate, to enjoy, to inspire and to love.
Petrovich employees who are present at the Digital Room display are told not to push products onto customers. Instead they are told to demonstrate value to the customer and let them make their own choices, creating a positive shopping experience. The Digital Room gives Petrovich access to new customers, new ways to show decorative materials and
increases their claim to be an innovative company.
The Future of Retail and the Changing Face of the Customer
Ibrahim Ibrahim from Portland Design presented the final session of the 7th Global DIY Summit concerning the future of retail. Ibrahim started by stating that the future is no longer five, three or two years away but is happening today. This is the result of the speed of change and change of expectations. He also stated that in business “innovation is not a thing you do but is the way you are.”
Participation is the new form of consumption
Ibrahim highlighted the four key trends future brands need to pay attention to and take onboard to succeed:
- Hyper-convenience shopping – research has found that 63% of global consumers are willing to pay more for simpler brands and 71% are willing to skip the store to avoid queues.
- Redefine loyalty – in the future customers won’t buy brands but will join them instead. Focus on experiences rather than channels of distribution and become a jointbrand rather than a buy-brand.
- Re-imagine the experience of shopping – It is important to build stories, not stores, and the customer should feel like the protagonist in these stories.
- Re-position value – Customers have an increasing thirst for knowledge and human contact and stores should provide this for them.
Ibrahim summarised his presentation with a quote from Douglas Stephens – “the physical store has the potential to be the most powerful and effective form of media available to a
brand because it offers an experience, that if crafted properly, cannot be replicated on-line”.