The future of retail – What digital will do next for commerce

Back in July of this year, while schoolchildren dreamt of holidays and commuters sweated their way to work, management consultancy McKinsey sat down with president of eBay Marketplaces Devin Wenig. The interview is above; we’re going to pick on some highlights below as Wenig pontificated on the future of bricks and mortar stores, the change needed in marketing, the fallacy of big data and what will make for good competitive advantage over other retailers in the months and years to come. Often with talking heads the output can be generic and anodyne. Wenig though offers some insightful thoughts.

The future of the store: “I think stores are going to become as much distribution and fulfillment centers as they are full-fledged shopping experiences… They’ll become technology enabled so that you can go to a store and see enough inventory, but you may shop “shoppable windows.” We’re building those right now for retailers around the world. You may end up hollowing out the real estate, where the showroom is a much smaller part of the footprint, and the inventory and the distribution center become more of that footprint.”

How marketing needs to change: “There are still many instances that I see where it is old-school marketing. It’s still about major TV campaigns, get people into the stores. That’s still important, and that’s not going to go away. But understanding how to engage in a world of exploding social networks, how to use search, how to use catalog, how to optimize, and how to engage—very different skills.”

Competitive advantage: “I think the answer is data… While from the merchant standpoint incredible selection may seem great, from the consumer standpoint it can be overwhelming. I actually don’t want to shop in a store with a billion items for sale, I’m just looking for this. Data is the way to connect a long-tail advantage with consumers that oftentimes want simplicity.”

Executing on strategy: “Great data is both art and science. There’s a lot of press about the science; there’s not as much about the art. But the truth is that judgment matters a lot… we bring quantitative analysis to that to say, “The right way to look at our customers is this, not this,” even though there are infinite ways we could.”

The fallacy of big data: “It’s not about big data, it’s about small data. Big data is useless… it’s about me connecting with you, my business connecting with you. You don’t want to be part of a big data set; you’re just looking to buy a shirt. And that’s about small data. That’s about understanding insights that I can glean about you that don’t feel intrusive, don’t feel creepy, and don’t feel artificial—but feel natural. That, to me, is the future. There are glimmers of success there. I wouldn’t say the industry has arrived. For all the rhetoric about data, it’s a work in progress, but a critically important work in progress.”

Merging experiences: “E-commerce [fulfills] a utilitarian function… Stores have an important element of serendipity… The future of digital commerce is trying to get the best of both… we’re trying to spur inspiration.”

Closer than you think

While this video from Google might seem a bit fantastical – and it has drawn parodies – it’s actually all now feasible. It’s just a question of integration, mixed with a bit of time.

Food for thought as multinationals seek to do good

Nestlé and P&G announce their plans for the future.

As the nation’s average girth seems to grow ever wider, so the number of articles and features on the issue swells. Just last week, Zeitgeist watched an earnest BBC reporter skulking around childrens playgrounds highlighting how the width of slides and swings have increased by 50% to accommodate larger children.

Campaigners also pressed for ages to be taken off of childrens clothes so that bigger children didn’t develop self-esteem issues after being squashed into clothes intended for children a couple of years older than them.

The Child Growth Foundation state that since the 1970’s, children’s waistlines have expanded by an average of 12.5cm – that’s about 5″!

12.5cm is wider than this column!

Statistics also suggest that the trend is current as the number of obese children has risen by one third in the past decade with more than 30% of children now classed as overweight, while other studies suggest that such an unhealthy start to life sets us up for years of misery.

Just as well then that the foods we eat are going to start being good for us as well as tasty.

This week Nestlé ‘announced the creation of Nestlé Health Science S.A. and the Nestlé Institute of Health Sciences to pioneer a new industry between food and pharma’.

Their objective being to ‘develop the innovative area of personalised health science nutrition to prevent and treat health conditions such as diabetes, obesity, cardiovascular disease and Alzheimer’s disease, which are placing an unsustainable burden on the world’s healthcare systems‘.

The new wholly owned subsiduary will be run at arm’s length from Nestle’s main food, beverages and nutrition activities, arguably to avoid accusations of a conflict of interest and cynicism given their other core products such as confectionery.

Nestlé’s move is part of a trend amongst food and pharmaceutical corporations into high-margin non-prescription health products for both human and animal consumption. The company plans to invest heavily over the next decade to build ‘a world-class Institute of Health Sciences, which will conduct research in biomedical science to translate this knowledge into nutritional strategies to improve health and longevity.‘

So with all this healthy food helping us to live longer and healthier, it’s reassuring to know that another multinational is taking its responsibilities to the wellness of the planet seriously.

P&G have announced that they have set a number of sustainability goals to be met between now and 2020. These cover a range areas of the business, from innovations through to marketing, and will also involve conducting research to identify ways in which consumers can be encouraged to dispose of waste using environmentally friendly methods.

“What’s important is that we don’t treat environmental sustainability as something separate from our base business,” said Bob McDonald, Procter & Gamble’s CEO.

“It does us no good to grow our business today at the expense of tomorrow.”

The list of goals includes replacing 25% of petroleum-based materials with sustainably sourced renewable materials, ensuring 70% of washing machine loads use cold water, a 20% reduction in product packaging per consumer use and taking 30% of their energy from renewable sources.

The multinational also realises the importance of education.

Under its Future Friendly initiative in the US, P&G pledged to reach 50m households, providing information about potentially eco-friendly habits. Developing nations are also on the radar.

“In these markets that are enjoying tremendous growth rates, like in South-East Asia, we need to get way ahead of the sustainability curve and make sure we’re doing the education.” said McDonald.

“We will need to continue collaborating with our suppliers, with consumers, with retailers and in our industry. No one company can have all the answers, but we need to be part of the solution.”

Whereas as few years ago, Corportate Social Responsibility may have been something that large organisations implemented as a token gesture, such moves into pharma-food and public declarations of sustainability targets suggest that it is now becoming a key influence in the direction taken by multinationals. Anticipating the problems and needs of tomorrow today, arguably more efficiently than many governments.

Zeitgeist remembers seeing old TV clips promising that a whole meal would come in tablet form. Turns out the medicine is going to come in food form.