On October 29th VL attended the Retail Council of Canada’s DTLQC Conference at the Palais de Congres in Montreal. This was the second iteration of the conference dealing with all things digital in the retail world. Compared to the previous year’s conference this one was more in depth and extensive, some real meat to chew on. You can read our recap of the 2014 conference here.
Gen M is Changing The World !
The theme of this year’s conference was the impact Gen M is having on retail. Christian Bourque of Leger Marketing walked us through the profile of Gen M, a generation that for the first time in history is actually pulling the preceding generations forward rather than being pushed from behind. A generation that has never known a world without the internet is mobile and impatient. The pull factor reaches far back into the baby boom cohort and is totally changing the way retail is being done. Within 5 years we will be living with a very different retail landscape Bourque postulated. Don’t believe me? Here are some facts.
Gen M are all about experiences. This speaks to the hedonistic archetype of this cohort. They are all about uniqueness, they love money but don’t need to show it off – think fast fashion (Zara, H&M). Life is about channels of personal choice and these channels must be real, authentic and provide unique experiences. Commodities are meant to be accessible and cheap, or free and reflect the functional side of their characters (Amazon, Costco). Experience and uniqueness is validation of who they are and they will pay good money for it. That is what is rapidly changing retail.
So lets look at some statistics that define Gen M.
|Buying Online for the Cheapest Price||Ability to Search the Internet for the Best Price|
|18 – 34 years olds||78%||76%|
|35 – 44 year olds||76%||54%|
|45 – 54 year olds||64%||44%|
|55 +||65%||No numbers|
The most insightful piece of information in the Leger deep dive was the % of each generation that actually went into a store having done the research on price, features and knew exactly what they wanted to buy. They knew the exact product, its price point and in most cases the SKU or UPC code the retailer used. 29% of Gen M arrived with all the details, often knowing more about the product than the floor staff. By age 45 this number had dropped to 9%. This is a major game changer for retailers because this trend is only going to increase as the cohort gets older and reflects their incredible use of mobile technologies.
Speed and Agility
Sylvain Toutant of DAVIDsTEA spoke for the need of both speed and agility in retailing. Gen M is the first generation in North America that evenly drinks coffee to tea – 50/50. Never before has tea been consumed in such volumes in the US and Canada. The rest of the world is floating in it. DavidsTea speaks to uniqueness by offering web only specials that can only be bought online. They are constantly introducing new tea blends and run on average 150 different teas at any one time. This is their brand DNA. Sylvain spoke to three things that make a brand what it is and what that brand needs to be Gen M friendly – Attitude, Community and Experience.
In discussing the three aspects he challenged the other retailers to ask themselves the question – Does your brand have a right to exist? Its “hard to make a monkey act like an elephant” was the way he summed it up. The take way was clear, be agile in your product mix, create a community of like minded people who are looking for an experience that reflects their values, lifestyle and expectations.
The Supplier – Retailer Relationship Needs to Change and Will be Forced to Change
The traditional supplier relationship in retail has always been heavily in favour of the retailer. Want shelf space you have to pay us for that prime location. Want into the flyer you pay for your ad space. Make mistakes in the supply chain with EDI and you pay for it on your score card and with charge backs and compliance charges. It’s all very punitive. Talk to most suppliers and they grumble under their breath about how retailers deal with them, its heavy handed. The balance of power is starting to shift, the shift will only accelerate and it’s a shift being driven by Gen M.
Stéphane Bérubé of L’Oreal gave a very thought provoking presentation titled How Digital is Shaping the Consumer Experience.
Our changing shopping habits, brought on by Gen M and the pervasiveness of mobile, is forcing retailers to provide more personalized and authentic experiences to their customers. Underlying those experiences is data. Without data retailers have nothing to differentiate themselves. If everyone has the same product it becomes all about what experience do you package around that product. Data is becoming the key that, in Stéphane’s mind, is going to fundamentally change the supplier retailer relationship. His premise is that as more and more retail is transacted in a vendor drop ship or experiential model knowledge of who the end customer is will become very important. He feels that retailers will in the in the very near future start to look to suppliers to provide more holistic information on the customer that enters their store. This is a fundamental shift away from the basic UPC catalogue that many suppliers provide today. L’Oreal is already doing deep dives into customer data to better understand their buying habits, their social preferences and their backgrounds. That data is being used to position product with retailers, design retail space and to help retailers engage their customers. The graphic below provides a good perspective on how data usage has changed.
The same sentiment was echoed by Nicholas F. Martire is his discussion on how the Aldo Group is working with retailers like JC Penny to create a more personalized in store boutique experience with their Call It Spring brand.
What Were the Conclusions?
Retail as we know it today with three tiers, Luxury, Mid Market and Commodity is changing and there will be casualties. The time frame for these changes to occur is between three and five years in the estimation of many of the speakers. So what is the change they all spoke about? Mid Market brands will have to either go North or South depending on their brand DNA. The Luxury experiential type retailer will be on one side and the commodity play type retailers will be on the other side. So who fits that bill today? Holt Renfrew, Saks, Zara on one side and Costco, Amazon for example on the other. These are only examples but they do reflect the change that is currently underway.
For suppliers this creates confusion but also forces them to reloook at systems, their data collection methods, strategies and the people they have employed. No longer is the old UPC catalogue with inconsistent data going to be enough, no longer will the manual processes stand up with the demands of retailers. No longer will the lack of supplier DNA be acceptable. So as the mid market shrinks so to will the supplier base. In the supplier space many of the speakers for saw the emergence of more nimble data driven companies that work in partnership with their retail customers to provide a cost effective commodity play or the more experiential high end play. Not much in between was the refrain.
Next year’s conference will be interesting!
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