LONDON--(BUSINESS WIRE)--As the world’s leading retailers gather in London this week for this year’s World Retail Congress, retailers across Europe predict the mobile phone will overtake the physical store, website and call centre, as the single most important communication channel with customers by 2020, according to new research from MasterCard. However, only 3% believe the industry is currently keeping pace with consumer demands for multi-channel retail.
This research, conducted amongst 300 leading retailers across Europe, forms part of a new industry report sponsored by MasterCard and written by the Economist Intelligence Unit: “The I Factor: how consumer demand is driving retail innovation”. It heralds the era of the “I-Con” – the smart, omnichannel, omnipotent consumer - and looks at how retailers are innovating to retain competitive edge in a rapidly revolutionised market, whilst setting out a vision of how that market will continue to evolve.
Key findings from the report reveal the principal factors shaping the industry today:
- The customer is in the driving seat: One in three retailers cited a more empowered customer (32%), alongside increased choice (competition from other retailers - 37%), as amongst the top causes of change in the retail sector in the past five years
- Retailers are ramping up investment in new technology solutions to keep pace with customer demand: in the next year, 44% of retailers will offer contactless payment technologies in-store, voting this the single most important area for short-term investment. More than one in three (35%) will invest in new technologies to enhance e- and m-commerce
- Data allows retailers to put the ‘I’ in I-factor: a personalised service is key to retail success, as retailers vote data the second most important area for short-term investment to retain customer loyalty and grow market share. Forty-one per cent say they will use data to deliver an improved customer experience in the coming year, whilst 38% are increasing customer segmentation and 39% are delivering personalised customer experiences across multiple channels
- But the industry feels hostage to the next game-changing technology: 34% believe that some yet unknown technology will be a main driver in changing customer expectations by 2020, hindering confidence in how to invest
- Smaller companies are capitalising on agility and speed: This feeling of uncertainty rises to 49% in companies with a turnover of €500m or more. Larger retailers are also more likely to cite legacy issues as holding the industry back when it comes to offering the multi-channel opportunities that consumers want: for example, 70% cited speed of adoption across different global market, versus 60% amongst smaller retailers. Ian Cheshire, Chief Executive, Kingfisher says: “At the moment, the fast-follower, the small and the nimble, have got more flexibility than the big boys. But the major retailers who are investing heavily in this are becoming more agile too.”
2020 Vision: predictions for tomorrow’s world:
- Mobile commerce is predicted to become king: whether it is through the use of near-field communications technology or using geographical positioning capabilities to offer targeted discounts, mobile will be the shop front of tomorrow. Whilst today mobile phones are being used by just 32% of retailers to communicate with customers, by 2020 43% suggest it will become the most important channel – overtaking stores, PCs, call centres and direct mail
- The high street remains, the future is omnichannel: whilst short-term retail investment may focus on enhancing e and m commerce offers, they will aim to revolutionise their in-store service provision in the longer-term, providing a seamless service across all channels. 41% of retailers envisage they will provide mobile points-of-sale in-store by 2020, whilst 33% will provide self-service kiosks and 35% will use location-based technologies to attract new sales.
- The global population of I-Cons will explode: there is widespread recognition that first-generation consumers in emerging markets will reshape the industry. Only 20% of people see it as a factor behind changing expectations in the last five years, but 36% believe it will be a driving force over the remainder of the decade, making it the single biggest factor behind changing consumer expectations in years to come...
Hany Fam, President of Strategic Alliances Europe, MasterCard Worldwide, says: “This is a hugely exciting time for the retail industry. Technological innovations have been transforming the sector, allowing retailers to extend their market share beyond their backyard and beyond borders.
“There is huge pressure on the industry now to keep pace with the consumer, however, and with the speed of technological change, that can be tough. Now, more than ever, nailing customer experience is critical and retailers need to provide a seamless service from the customer, from first contact through to payment. More than that, retailers need to understand their customers and their purchase history, so they can personalise their service and connect with their customer in an easy, relevant way, via whatever channel suits them.”
For the full report, expert interviews or case studies, please call Zoe Gray/James Lusher on 0207 544 3000 or email email@example.com
About the report:
In June and July, on behalf of MasterCard, the Economist Intelligence Unit surveyed 306 European retailers to investigate their views on the challenges and opportunities for the retail industry in the years to 2020.
Respondents were drawn from the UK, France, Germany, Russia and Italy. Retailers were grouped by type: including independent retailers, department stores, supermarkets, specialty retailers and chains. They were also grouped by size (annual revenues of less than €500m and greater than €500m).
In addition, in-depth interviews were conducted with eight experts from leading retailers:
Federico Barbieri, senior vice president of e-business at PPR
Ian Cheshire, chief executive at Kingfisher
Pilar Gonzalez, head of global payment strategies at Inditex
Jody Goodall, head of solutions architecture at Kiddicare and Morrisons.com
Mark Newton-Jones, chief executive at Shop Direct
Andrea O’Donnell, commercial director at John Lewis
Dr. Christian Plenge, head of architecture and innovation at Metro Systems
Mike Shearwood, chief executive at Aurora Fashions
MasterCard (NYSE: MA), www.mastercard.com, is a global payments and technology company. It operates the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard’s products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone. Follow us on Twitter @MasterCardNews, join the discussion on the Cashless Conversations Blog and subscribe for the latest news.
Quotes from interviewees:
On the empowered customer:
Mike Shearwood, Chief Executive, Aurora Fashions
“In a lot of organisations there’s internal resistance to change. We have tried to take a view that if it’s right for the customer it will be right for us eventually.”
On today’s multichannel retail environment:
Andrea O’Donnell, commercial director of John Lewis
“The reality is that you’re competing with Amazon, whose operating profits are between 1% and 3%. The competitive dynamics have moved significantly. You have to be as good as Amazon online and offer the same amazing experience as you do offline.”
On the challenge for major retailers:
Ian Cheshire, Chief Executive, Kingfisher
“At the moment, the fast-follower, the small and the nimble, have got more flexibility than the big boys. But the major retailers who are investing heavily in this are becoming more agile too.”
On the benefits of mid-market flexibility:
Mike Shearwood, Chief Executive, Aurora Fashions
“One of the guys from Oasis came and asked for £2,000 to develop something in 2009”. The results, he says, was fashion’s first transactional iPhone app. “Sales through mobile are now 10% of the channel.”
On new technologies and the future of retail:
Dr Christian Plenge, Head of Architecture and Innovation at Metro
Systems, Metro Group
“NFC payment using a smartphone is currently the most sophisticated technological solution – we think it has a very big potential to become a common payment method because the smartphone is already the ‘all-purpose device’ of our customers. But mobile payment has to be as easy for the consumer as paying with a credit card, otherwise it won’t catch on. Currently, different players on the market – banks, mobile carriers, smartphone producers, et cetera – are competing to establish their own NFC solution as the industry standard.”
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