Management Unleashed – The Retail Revolution

This article was first published in Business Times on 17 August 2019

Management Unleashed – The Retail Revolution
John Bittleston, Founder and Chair, Terrific Mentors International

Most people enjoy shopping. Saturday afternoon at the shops used to be something of an outing for the family. The exercise involved in walking through a town or mall was worth half an hour in the gym.

The rise of the supermarket
Then came the supermarket. It changed the shopping outing but there was still a good walk and possibly coffee at the in-store cafe. The shoppers were changing, too. Longer life and more money gave them opportunities they had never thought of and needs for their ageing bodies they hadn’t imagined could exist. Time previously spent at the fishmongers, butchers and greengrocers was now spent at the chemists choosing OTC remedies or waiting for prescriptions to be filled. Bigger changes were to follow shortly.

Buying power moved from the consumer into the hands of the supermarket chains who demanded bigger and bigger discounts on the quoted price from their suppliers. It immediately benefited the consumer but led to limited goods offered. The retailers now presented their ‘own label’ goods, usually cheaper versions of the most popular brands. Cheaper and quite often nastier. I knew one factory where the plate-side additives such as tomato ketchup were a standard product and pack. You could have your own label on it but the contents were identical to everyone else’s. On this basis the product runs could continue indefinitely with only an occasional label change.

Lifestyle changes
Originally the takeaway was considered rather down-market. Hokkien mee in Singapore and Asia, fish and chips in the UK were regular takeaways long before McDonald’s, Pizza Hut and other enterprises made collecting the cooked meal possible. ‘Take away’ was swiftly followed by ‘delivered’. Shopping, at least some forms of it, had become ‘sit and wait’. Choose from an online catalogue, call from the mobile, switch on the television. Minimal exercise turned ‘sitting’ into as dangerous a health threat as ‘smoking’. What’s next for shopping?

Alongside the changes in physical shopping came the climate and increasing concern about the diets and lifestyles people had adopted. Tubby children have long since been a growing feature of pre-teens youth. Endless burger and pizza do little for good nutrition but a lot for excess weight. Governments and local authorities have become concerned about too much fat and too little exercise, exacerbated by 24-hour mobile game addictions.

Data analytics, AI and robotics
Trends in consumer purchasing habits are now easier with digital analytics. They need to be. The consumer has usually been steady and loyal in the past. No longer. Today’s consumer is fickle and mercurial, responding to new products, new technology and competitive prices. Price structures are now such that working out what you are really paying for something is complicated, with special time-limited prices and ‘bundles’, often designed to offload old or unsatisfactory stock.

Simple consumer price calculators are growing to allow an ordinary purchaser a fair chance to calculate what they are and are not getting. Warranties have been reduced and are hedged round with terms and conditions that can make them virtually valueless. One-day delivery, now in its infancy, will grow dramatically to allow the consumer to have a virtual shop-and-deliver in the home. Most people will migrate to this form of shopping, at least for essentials and regular purchases. A drive across town to buy toilet rolls doesn’t make much sense.

Robots will increase the ease with which you can shop. They will soon be patrolling stores to assist confused or disabled shoppers, to keep an eye on security and to restock empty shelves. Robots will also, in time, take over a large part of home delivery. A feature of this is the consistency of who orders what. Robots like regular behavior.

AI will enable retailers to order more closely to JIT thus improving the efficiency of the logistics chain. In fact, a considerable cause of inconsistent ordering in many countries is the threat or imagined threat of government policy change. In Britain, for example, there have been two government alerts to stock-up and, later, stock-down as Brexit deals have emerged and disappeared.

Impact of technology advancements
The impact of data analytics is only just reaching the retail scene. Retailers are often traditionalists, believing that their store(s) will run forever. This attitude, induced by the high capital cost of starting a store with adequate parking space, has led to reluctance to get, understand and use the data now available. As it impacts the retail scene, data analytics will prove highly effective in creating better stock forecasting, clearer information about consumer acceptance / rejection speeds, faster analysis of impact of price movements, both the retailers and competitors.

The greatest impact of modern data on retail outlets and home delivery will be in new products. Just as we are now able to pinpoint who likes what and how often they buy it, so we shall be able to meet their needs more specifically and quicker. For example, if you like a particular level of spice with your Thousand Island Salad Dressing you will soon be able to specify this when you order or enter the shop for it to be produced within ten minutes to your specification.

Change in consumer behaviour
A whole new retail scene will be opened up by the increasing switch away from meat and animal-based products to vegetable-based consumption in the interest of both the climate and health. The cow population, for example, will probably reduce by 30% in the next six or seven years. City farming will increase to reduce logistics costs. Healthy eating will impact sugar-based products.

The retailer will have to be even more alert to consumers changing their habits fast and unpredictably. As an example of this we can say that smoking was predicted to take a generation to almost eliminate. In practice it took half that and made people extremely health conscious at the same time. The concept of specialist retailer is almost finished already. It is not a retailer’s specialist knowledge that matters now but the buyer’s economic clout.

Staying relevant for Singapore retailers
Singapore has had its time as a nation of shopkeepers. There will still be a demand for some specialist shops – shoe repairs and key cutting, both requiring physical presence, are good examples. But increasingly, purchases will be made from the comfort of home and the lure of an online or physical catalogue.

And one day in the not too distant future your goods will be delivered by a drone to your door or, in a high-rise condo, your window. The drone will wish you good-day and tell you the latest news and offers.

It won’t be as wise as the butcher but it will be better informed.