If 2022 was supposed to see a return to normal for the retail sector as the Vaccine Economy kicked in and shoppers returned to the stores, then things didn’t quite work out as simply as that.
COVID-levels of online growth that had delighted investors vanished as the omni-channel balance between clicks and bricks adjusted to a new normality. That sent the short termists on Wall Street into their usual headless chicken state of panic and saw retailers that had been lauded as success stories a few short months ago, turn into pariahs.
For 2023, ongoing pressure from the macro-economic climate around the world isn’t going to make life any easier, but the real challenge for retail is to find that elusive omni-balance that’s going to mean the difference between success and failure.
Inflation, recession and shoplifters - omni-channel retail bellwether Target doesn't have its problems to look for
Consumers are feeling increasing levels of stress, driven by persistently high inflation, rapidly rising interest rates, and an elevated sense of uncertainty about their economic prospects. With high rates of inflation continuing to erode their purchasing power, many consumers this year have relied on borrowing or dipping into their savings to manage their weekly budgets. But for many consumers, those options are starting to run out.
Why? Perhaps no retailer stood out as a prime example of the painful re-balancing of the omni-channel mix in the Vaccine Economy that Target. Rightly lauded as a leader in retail transformation over the past few years, the US bellwether had a traumatic time in 2022, up to and including a hefty rise in shoplifting in-store. Keep calm and carry on, is the message from the top. There’s no reason to believe that Target can’t address its issues in 2023. But it will be keenly scrutinised on Wall Street and beyond.
What you see in our results is that we can run compelling stores and clubs, scale a first- and third-party e-commerce business and connect them together in an omni-channel fashion that saves customers and members money and time. Our strategy unlocks growth opportunities for us in a thread that runs from digital retail to fulfillment and advertising and opens up even more opportunities with health and wellness and financial services.
Why? Walmart was the retailer that panicked investors back in the summer when its COVID-levels of super-growth online collapsed as customers returned to stores. Add in an opioid embarrassment and things looked pretty rough. But by last month, the ship had stabilised and CEO Doug McMillon was back on form, talking up the firm’s progress towards becoming “truly an omni-channel retailer”.
Running faster up the down escalator - a Marks & Spencer omni-channel transformation update, complete with ‘super app’ ambitions
All of us have got to run faster up the down escalator.
Why? M&S is a UK retail institution that has taken its own sweet time to get to grips with the realities of the omni-channel world. Its partnership with Ocado has accelerated its ability to play catch-up, but there’s still a lot of work to be done. But you can’t fault the ambitions laid out by seniors management recently. The question in 2023 will be whether these can be met in practice. The other question for customers is whether their local store will survive the latest culling program instigated to shed some real estate fat.
Luxury e-commerce is thriving, says José Neves as Farfetch passes an inflection point in tie-up with Richemont
Luxury is an amazing industry, cemented in the pillars of creativity, craftsmanship and culture, and from a financial point of view, very profitable and resilient, even in very adverse macro environment.
Why? In a year in which e-commerce growth shook off the super-fast levels seen during the height of the COVID lockdowns and returned to something approaching normality again, the luxury retail sector has proven relatively immune to the rebalancing. For e-commerce giant Farfetch, its ambition to be the global platform for luxury continued apace with an agreement to acquire 47.5% of Richemont’s YOOX Net-A-Porter (YNAP) online fashion group.
No McRobots in the restaurant - McDonald's CEO Chris Kempczinski has a more practical digital transformation menu in mind
There are things that you can do around systems and technology, especially taking advantage of all of this data that you're collecting around customers, that I think can make the job easier, things like scheduling, as an example, ordering as another example, that will ultimately help reduce some of the labor demand in the restaurant. But…is there a big automation solution? You're not going to see, like I said, robots in the restaurant.
Why? A welcome serving of pragmatism to counterbalance the tsunami of marketing around bleeding edge tech. McDonald’s has had its own adventures in the likes of AI, but what CEO Kempczinski has in mind now is a decidedly more practical/deliverable vision of what he wants to see coming out of Ronald McDonald’s digital transformation efforts.
We've been able to pinpoint the source of each of the issues and challenges confronting the company upon my return. Some are definitely COVID-related, some were a function of not focusing on the long term, and, unfortunately, many were self-induced. More important, we now have clear line of sight on what we need to do to totally re-invent the company and drive accelerated profitable growth around the world.
Why? Starbucks has long been regarded as one of the leaders in digital transformation, but it’s stumbled of late. Returning CEO Howard Schultz, who led the coffee giant on its first digital imagining, had a re-imagining in mind. Most of this sounds pretty sensible, but the aspect that caught the headlines is the arrival of NFTs as part of a plan to enhance the already insanely successful Rewards loyalty program. This entered beta earlier this month with plans for a general rollout next year. That’s when we’ll see if customers are thirsty for an NFT with their latte.
We sell fresh fish. And fresh fish is only relevant as long as it is fresh. The moment it is not fresh, it stinks. Just keep that image in mind and then you will understand what I what I mean here. We need to make sure that what we put in front of our consumers is relevant, it’s contemporary it's the trend of the moment, because if it's not, it's good, but it's not fresh fish. It's a completely different business.
Why? Once the darling of the UK e-commerce scene, ASOS has had a rough time in the Vaccine Economy. For new CEO José Antonio Ramos Calamonte, the challenge now is to overhaul and reposition the e-commerce retailer into a viable operation in an increasingly crowded market chasing the ’20-something’ fashion conscious consumer at a time when disposable incomes are being squeezed by inflation and the global cost of living crisis.
Bad news retail sector - online sales taxes won't raise that much and would be a nightmare to administer
The simple fact is, you cannot tax people back to shops.
Why? Governments around the world have talked up the idea of online sales taxes to try to (a) boost their coffers and (b) supposedly somehow help the bricks-and-mortar retailers in the face of competition from online-only rivals. The bad news is, the theories just don’t add up. Or at least, they don’t according to a convincing report from the UK’s Institute for Economic Affairs think tank.
Trialing is how we always enter new markets. We trialed five stores in the north east of the United States when we first went in there. It's how we learn. It's how we optimise. Trailing has stood us in really good stead in the past and we don't apologise for doing so, again.
Why? Fast fashion firm Primark doesn’t do e-commerce. That’s it. That’s the policy. No way! Except…in 2022, the high street success story took a cautious step into the world of digital with the launch of a click-and-collect trial. There’s still no sign of any kind of online delivery option, but…
It's all about 'me time' for customers as the omni-channel retail balance shifts in the Vaccine Economy
As the omni-channel retail sector shapes up in the Vaccine Economy, are we all after a bit of ‘me time’ when it comes to discretionary spending? And are we looking to get the real world experience when we’re spending it, with in-store sales up and e-commerce down?
Why? Treat yourself!