Retail Trends is an annual meeting of the retail and FMCG industries that participants attend to exchange experiences and collect inspiration. During an intense day of keynotes, talks and debates, you can learn about the most interesting trends shaping commerce and its environment, as well as forecasts for the future. So what are these recent market trends?
The modern business environment increasingly often characterised as a VUCA world, and quite adequately so, perhaps, as it is becoming more and more dynamic. This is why it is difficult to define a single basis for strategic thinking about development. Trends often contradict each other, and indicators are ambiguous.
From the point of view of retail business, we are undoubtedly dealing with a decrease in margins and a slowdown in the volume growth of consumption. The “fight for margins” may turn out to be the biggest threat to companies. Entrepreneurs face the necessity of optimizing their own organizations and simplifying business models, as the increased costs can hardly be covered by the increase in sales. The market will look for both investment in operational efficiency and for cost cutting.
Strategic steps will be taken soon: there will be acquisition opportunities for entire companies or their parts, though such transactions are becoming more and more difficult. Attention is also paid to transformations that follow acquisition, which prove the profitability of the operation only if the acquiring company finds an idea, people and budget for proper integration.
While the consumer is becoming exceptionally demanding, the price remains the most important criterion – and so does quality. It seems that this price-quality ratio will be crucial in the near future.
The basic trend that is being talked about today is the search for the basis of customer loyalty to the brand. The consumer is changing and their previous attachment to brands is dwindling. The consumer is also much bolder, has greater access to alternatives and, above all, might celebrate new values. There is also talk about the mistakes of entrepreneurs who underestimate the change and prioritize KPIs too much, instead of focusing more on the consumer and on the long-term perspective. Because, above all, the consumer is now becoming a conscious partner who is increasingly difficult to deceive. With each negative experience, they are more likely to move away. In order to build loyalty, a whole set of values must be taken into account.
Ideas for loyalty in the market are different. Lidl focuses on the quality of products at a good price as well as the simplicity and speed of shopping – the shop must consciously decide what assortment it wants available. The application that establishes contact with the customer and connects the virtual world with the physical shop is also extremely important for Lidl. Eurocash, on the other hand, emphasizes the bottom-up involvement of franchise holders – each shop is its own helmsman, and thus has separate distribution of responsibility. Equally important is proximity to customers – the ability of a shop to become the fabric of their lives, being similar to them and changing the way they change. Żabka, on the other hand, “creates” its own consumer, boasting that it is not a shop, but an effective ecosystem of additional products and services with a communication platform. The main goal of Żabka is to simplify the life and time of customers.
Artificial Intelligence in Retail
The agenda of Retail Trends 2023 is dominated by AI – everyone talks about it because they feel that we are experiencing a major leap. Currently, the possibilities of artificial intelligence, as well as our access to it, go beyond the assumptions made a few years ago, or even months ago. No wonder that the trend has also reached the retail industry and, surprisingly perhaps, affects stationary businesses.
It is worth asking whether AI is really necessary for us, and above all our customers. Is it a fashion? Or does it deliver real value? Graphical experiments with AI in marketing are one thing, and implementing technologies that are supposed to have a real impact on elements related to the experience of stationary shopping is another. You have to do it skilfully, not letting yourself get carried away by the popular trend. At present, AI in business is used primarily for predictive tasks and testing hypotheses; it facilitates data analysis, but it does not work without human participation.
Brands such as Coca Cola or CCC successfully weave AI-generated content into their campaigns, targeting not only the Alpha generation. Samsung has even set up a Digital Art centre, where under their brand people of all ages pass through some really engaging exhibition rooms. Oboi, in turn, has just created a shopping assistant – a tool that directs us in the shop to what we want. AI can also support after-sales activities through hyper-personalization. An example is BP working with Latoria and Nanovo in the implementation of artificial intelligence in digital signage systems.
Interestingly, there are unlimited possibilities for large brands to cooperate with Open AI and jointly create tools that lead the consumer and their experience “by the hand” or even bring the brand to their home. Smaller entities, on the other hand, can gradually accustom their recipients to technology and create good experiences at a lower level – adequate to the needs of their customer (as is the case with the famous robot mascot at Carrefour).
Customer Experience & Staff Experience
One unwavering trend is that of customer experience, which focuses on shopping as a process that begins long before we enter a brick-and-mortar shop and continues long after we leave. However, what is discussed increasingly often is also the so-called “staff experience”. It is even said that without the latter there is no question of the former, because it is the staff that transfers their emotions and attitude to the customer’s purchasing process. Staff experience is also related to the supply chain, warehousing, easy inventory and other features of facilities that allow retail teams to work efficiently and serve the customer well.
The Pepco Group, which is currently undergoing a rebranding process combined with an attempt to meet the needs of customers better and expand the sales area, started by getting to know its customers through surveys conducted in homes and at the shops (“Shopper study”), analysing behaviour in the shops and creating the “Customer Satisfaction Index”. No less significant for Pepco is also the development of their products assortment in accordance with customer preferences and the increasing introduction of sustainable products. The company is even part of the “Better Cotton” association that educates farmers.
Ultra-convenience shops, where shopping is treated as an experience, are even more focused on customer experience. This is a new dimension of unattended sales available around the clock. This trend responds to the needs of consumers who want an easy shopping process, freedom of choice, intimacy, and 24/7/365 access. At the same time, it is part of the ongoing digitization of our lives.
An example here are the self-service shops of Carrefour or Żabka Nano – a network of fully autonomous outlets available in 60 locations, based on a camera system and artificial intelligence. Shopping takes place without cash registers – products are just taken from the shelf to be added to the automatic payment. They can also be brought back to shelf without any consequences if you change your mind.
The Żabka Group went a step further by starting cooperation with Lite e-Commerce and jointly created a new Jush application, which is a real breakthrough on the market of express online shopping – offering free delivery of selected products in 15 minutes for a minimum order of PLN 35.
The Ultra Convenience trend will certainly develop, for example, in the ecological direction, proposing the so-called “relaxed delivery” – shipping at the optimal moment for the shop while appreciating the customer for choosing this option. Further innovations are possible, for instance in the form of creating a set based on previous purchases with the option of a partial new fit.
The growing interest in self-service shops does not mean that physical outlets are going away. Multi-channel in retail has been a fact for some time now. However, after choking on online shopping during the pandemic, consumers are eager to return to traditional shops that are part of their environment.
Customers excel at navigating between various forms of shopping and, even if they do not decide to finalize online, they often make most purchase-related transactions there. CCC sees physical shops simply as another channel in the customer’s purchasing path. The brand has a multitude of technical devices to reach the online consumer, as well as innovation in the form of e-footwear based on foot-scanning technology. Based on its observations, CCC does not see the decline of stationary shops, but only a transformation supported by artificial intelligence.
The food industry seems to be lagging a bit, as Poles are not yet fully ready to entrust the staff with the choice of fresh products. Meanwhile, shops show the utmost care here, being aware that the success of the next order depends on it. On the other hand, the retail industry is not yet able to provide the same online experience – so far, we can’t smell bread online…
It seems that brick-and-mortar chains deliver something that the online channel cannot, and they just need to be improved to fit customer expectations. And the latter are quite similar: what matters are access to the products, the selection and relevance of the assortment available, convenience, speed in delivery, and secure payment. Customer behaviour will never be changed by force. It is therefore crucial to respond to their needs – with such ideas as “slow” cash registers (the so-called “slow lanes”) introduced in the Jambo network in the Netherlands, where senior customers can shop slowly and talk at the same time. The new solution prevents social exclusion.
The future in omnichannel also means adjusting activities “per outlet” of a given network in a specific city. The smaller the location, the smaller the share of online sales. And while most people are glad they don’t have to go to the shop at all, there is also a group who say that the local shop is their favourite shopping destination.
The 15-minute City
The trend of the 15-minute city adapting to its residents, improving the quality of their life, based on sustainable construction, refers to the idea of locality. Such a city should be friendly to people and the environment, multifunctional, decentralized, and compact. An important feature of it is inclusiveness – integrating the local community, promoting local initiatives, all with the help of spaces that facilitate bonding. It is all about a sense of citizenship and belonging, which is extremely important today. A 15-minute city should also stimulate the local economy, support local business, create jobs and, above all, vibrate with life. One of the Polish examples of such a solution is Miasteczko Wilanów in Warsaw, where there are about 600 retail and service outlets, including over 90 restaurant and catering outlets, many of which are companies run by local entrepreneurs.
15-minute cities have a multi-layered impact on trade. These types of spaces are usually very well planned and thus increase the number of available commercial premises – the flexible and effective ones. Ultimately, it is about giving people access to services and commerce solutions tailored to their preferences.
Investment management in times of crisis was also an important topic at Retail Trends 2023. Representatives of the industry unanimously stated that what counts for their companies is agile management. Each expense should be thought over, and if we invest, it is worth monitoring the process all the time, changing the investment project when necessary and looking for ways to improve each of its elements.
On the other hand, in the case of implementing technologies, it is important that they are needed here and now to improve sales efficiency. They should be distinguished from attractive solutions of the future, for which the customer may not be ready yet. The biggest challenge is deciding which are which, because the range of solutions is very wide.
Technology brings many innovations to the shop format, better use of space, reinventing it or creating incentives encouraging the customer to enter a given shop. Since the time of visiting the shop has been shortened, it is necessary to develop better customer interactions. Technology also creates great opportunities in the sphere of logistics, and yes, larger shops often use the so-called “dark shops” for convenience, providing quick delivery of the missing products.
A New Dimension of Innovation
Although technology has become synonymous with innovation, it is not the only way in the retail industry. We talk about innovation in the context of robots, ChatGPT, artificial intelligence or automation. And while retail celebrates the story that innovation must be very technological, it can be more mundane, too. It might simply focus on a new way of solving consumer problems. In this context, “innovative” means implementing a task, problem or solving a situation in a different way.
An example can be an effectively carried out shop renovation, in which, instead of throwing away everything that has been used so far, we can act in three ways at the same time: bring new elements, get rid of some of the existing ones, and selecting elements for renovation. An apparently simple innovation of this kind can bring savings of 35% that can be added to the capex budget for new investments.
The No-Limits Shop
Limitations to retail activities sometimes result from the complexity of the multi-generational world. Although young generations quickly gain experience, it is difficult for retail chains to choose appropriate communication for the group. On the other hand, older people are difficult to convince to new technologies, as they need more support and attention from the staff.
Carrefour, as an omnichannel network with shops in all areas – from traditional to convenience to online and applications – conducts a variety of communication campaigns that allow it to reach every group of customers and target a personalized offer. After all, a family with children has different needs than a young person entering the labour market.
In the more traditional chain of Livio shops, the challenges different – Livio is doing its best now to keep up with the progress and trends generated by large chains, and above all the price they offer to customers. Ultimately, Livio shops will also be digitized, but at an unhurried pace.
Serving customers of different generations, Shell petrol stations also diversify their offer. Poland is at the forefront of developed countries when it comes to the “anytime, anywhere, anyhow offer”. Shell’s strategy assumes that by 2025 a 50% margin split from fuel and non-fuel offer will be achieved. Here, the challenge is to have a sufficiently large storage facility at stations that can accommodate an ever-increasing assortment related to conscious customer choices related to, for example, milk or coffee.
We are witnessing the transformation of petrol stations such as Shell, which concentrate on experiences. A certain complementarity of services comes into play here, from simple car services, through supplying the car with various types of fuel, to creating a place to meet the needs of various customers. It is also necessary to understand that many of the customers are fairly tradition and rather reluctant to switch from loyalty cards to applications, for example. Education is needed, and it is best offered gradually so as not to scare or discourage.
EuroSpar has created a shop in Łódź stylized to refer to the 19th-century golden era of the textile industry, also containing elements relating to the local Film School. In this way, the chain adapted the shop to the place and the customer. Locality is also manifested here in the selection of the assortment. This is in line with the vision of Spar International, which assumes that shop concepts should be adapted to a given market. The Polish branch takes it even further to the local ground. The goal of Spar Polska is to adjust the assortment, price and, above all, the visual offer to the place where the given shops operate, with elements that customers associate with their locality and thus can identify more with a given outlet.
Carrefour in Poland also draws from the knowledge and experience of branches in other countries and from good practices that work well there. And so, as a novelty, it has introduced “Outlet Zones” – allowing customers to find something attractive at a special price.
The exchange of experiences is as important as efficient communication with franchisees while maintaining a certain autonomy, for example in the selection of products.
To surprise the consumer and maintain relations, retail chains use attractive forms of communication. With popular app that allows users to play with a virtual frog, Żabka is a market leader in this respect in Poland. Other attractions waiting for customers of the brand online include a piñata or a drawing wheel.
Gamification is a growing trend that consists in the transfer of mechanisms known from games to reality as a means of making the offer and customer relations more attractive. Most of us like games, though everyone associates them with something different. Games evoke positive associations, emotions and help to build brand loyalty.
Retail Trends 2023 signals a huge growth dynamic for the retail market, as well as a focus on the consumer and the values and shopping experience important to them. At the same time, it is impossible not to notice that the transformation in Poland is proceeding in two ways: while big cities absorb technologies quickly and efficiently, and customers are hungry for new products, small towns are slowly and gradually trying to keep up with the progress that awaits them anyway. Nowadays, the financial aspect also turns out to be important, but it does not hinder development and, above all, makes investments even better monitored and thought over. All brands have an appetite for further expansion – through acquisitions, innovation, or consolidation. It seems change is inevitable.