Payments, omnichannel, and the meh-taverse: RTIH brings you six key takeaways from Retail Technology Show 2023
Retail Technology Show took place last week at London Olympia. And it was really rather good. Here are our six key takeaways from a fantastic two days of innovative exhibitors and thought provoking conference sessions.
1. Interest in crypto cools but digital currencies could be of long-term interest to retailers
Bitcoin and other such cryptocurrency was not much discussed at Retail Technology Show 2023, mainly because of the ‘crypto-winter’ evident during the past year when its value fell and malfeasance by the likes of Sam Bankman-Fried at the FTX exchange was exposed.
However, the phrase digital currencies spans cryptos, stablecoins and central bank digital currencies (CBDCs), and the latter might be of long-term interest to retailers.
There are numerous CBDCs that are currently being piloted by the Bank of England, US Fed and so on, in order to try to ensure control isn’t ceded to private cryptocurrency players outside of the established financial system.
“Digital currencies are here to stay,” said Hari Nair, Principal Architect at Morrisons, while explaining that a large corporation such as his supermarket with global connections and supply chains would only really be interested once there was a global, central bank backed player in the emerging ‘wild west’ marketplace.
For instance, someone like SWIFT or its rival ripple that uses blockchain technology would have to be in place backing and guaranteeing any cross-border payments that were reliant on the underlying and still emerging distributed ledger technology (DLT) that powers the blockchain.
“Digital currencies will become mass market,” said Studio Retail’s Kendrick. “But not in the next five years.” That timespan will only deliver more clarity about the direction of travel.
Digital currencies are just one of many new emerging payment – and data – options that will soon become available to retailers, with wearable tech another possible longer-term possibility.
However, for now, the rise of account-to-account payments, social media powered transactions, and so forth was much more front of mind for the retailers in attendance at this year’s Retail Technology Show.
2. Innovation is a long game thing
One of the first conference sessions at Retail Technology Show 2023 consisted of a fireside chat with Paul Wilkinson, Group Product Manager - Grocery Partners, Deliveroo, entitled What I’ve Learnt About Retail Innovation From Working At Amazon, Tesco Labs And Deliveroo.
Responding to the question, what advice would you give retailers looking to achieve an innovation mindset?, Wilkinson responded: “Carve out plenty of time for your team to work on it. Give them space to do innovation.”
He added: “They also have to stay close to the business. Tesco Labs was in the retailer’s main campus. Don’t set up a trendy office in, say, Shoreditch.”
Retailers should also prioritise ruthlessly. “You might do ten things a year, but if one of those succeeds then you have won,” Wilkinson commented.
“Have space for failure,” he continued. “And pick what will have the biggest impact for customers. Will it also save the business money or make it money?”
Companies should think in the longest possible timeframe.
Tesco, for instance, has been working with Israeli startup Trigo on a series of autonomous stores. “Trigo is a long game thing as, when I was at Tesco, we knew that it would have a huge impact.”
If you don’t do that, then you will be constantly fighting fires, Wilkinson warned.
3. Tough times demand a focus on the fundamentals
“We cannot do a lot about the [tough] economic environment,” said Peter Cowgill, ex-Chair of JD Sports from 2004-2022 and now a non-Executive Chair of The Fragrance Shop, in a wide ranging discussion about the present tough times during the opening day of Retail Technology Show.
The cost-of-living crisis, due to the pandemic and war in the Ukraine, is impacting retail. But Cowgill advised the thousands of RTS attendees to focus on the fundamentals, such as:
· Differentiating yourselves from the competition
· Using technology to drive retail efficiency [and margins]
· Focusing on customer service, and so on.
“If you are the best in your marketplace then you will win despite the [tough] environment,” he said. “During my era at JD Sports we had the 2008 global crash. But we carried on winning.”
4. Talkin’ about a payments revolution
“Consumers will have so many more payment options in the future,” said Gareth Hughes, Executive Director Retail Technology North America, Estée Lauder, during a conference session on the last day of Retail Technology Show (27th April).
Panellists from Morrisons, Studio Retail, part of Fraser Group, and others debated the future of contactless, card, digital wallet and currency payments, tokenisation, and the ecosystem likely to emerge at the end of this decade as trends such as Open Banking accelerate.
Interchange fees will see considerable change over the next five years and biometric usage for security purposes will rise, predicted Hughes at Retail Technology Show 2023’s concluding payments panel.
Hughes added that the buy now pay later (BNPL) explosion seen with Klarna and its ilk in recent times will face new challenges: “As more regulation is imminent and higher interest rates might hamper them. This will impact their pricing discussions with merchants.”
“Bank-to-bank payments – sometimes called account to account – will also rise,” said Hughes. This should cut costs and be a boon for retailers as expensive card usage declines.
5. The metaverse is turning into the meh-taverse
Last year at Retail Technology Show, the rapper and angel investor Tinie Tempah called the metaverse an “incredible opportunity” for businesses to find new customers and revenue.
The British musician said retailers and brands who do not get involved or invest in the metaverse now will look like those who missed out on the beginning of the dot.com wave or the rise of Facebook.
Tempah commented: “There are going to be several metaverses in the same way there are several solar systems. There are going to be lots different brands, retailers and individuals who create their own metaverses.”
Enthusiasm was on the wane in 2023, however, with very little mention of the M word both during the conference sessions and on the exhibition floor.
When it came to cool new technologies, all the talk this year was of ChatGPT.
During tough times, perhaps many retailers are moving resources away from the metaverse and into other areas where the rewards and benefits are more immediate and obvious?
6. Omnichannel is alive and well and stores have a vital role to play
Omnichannel is bigger than ever, accelerated by the Covid-19 pandemic and economic uncertainty.
The polarisation of affluent customers from less wealthy ones who want value during tough times but still expect an omnichannel service is evident in retail, according to a roundtable panel of experts held by FreedomPay on the FinTech firm’s stand at Retail Technology Show 2023.
“The top 20% are doing 40% of the spending,” explained Richard Lim, CEO at Retail Economics.
He added that a more integrated omnichannel approach from retailers was necessary to serve enhanced customer experience (CX) expectations across all sectors.
Research from FreedomPay, carried out with Retail Economics and unveiled at Retail Technology Show 2023, also supported the changing CX landscape. This necessitates better data mastery and interaction between retailers’ online and in-store service.
According to the UK survey unveiled at the show, shoppers are:
· Spending 35 minutes extra per week searching for the best deals on non-food products compared with last year. In total, across all sectors, UK shoppers are browsing four more hours per week but they’re buying fewer products as the cost-of-living crisis bites.
· There has been a decline in online retail sales volumes (falling 14.9% year-on-year), reinforcing the view that UK shopper journeys have become more complex as people search online for good deals, but convert more in-store. Online non-food purchases actually fell by 5.7% last year, according to the survey.
“Retailers recognise the purpose of the store is changing as it becomes more of a marketing and brand acquisition tool, especially for the affluent,” said Lim, while cautioning that it is still a valuable conversion asset for the mass market – even more so if the store estate was previously downsized to only profitable units.
According to fellow roundtable panellist, Hannah Regan, Financial Policy Lead, at British Retail Consortium (BRC): “Customers are getting more savvy now,” as well as more segmented with “Millennials more socially conscious and desiring of experiences, such as a gig in-store, to convert a sale.”
In order to meet enhanced CX expectations from differing customer bases and sectors, data must be front and centre, according to FreedomPay’s President’s Chris Kronenthal.
“You need to tie all the data together,” however he cautioned during the on-stand debate at London’s Olympia. This spans to being on top of your stock, try-before-you buy online/returns policies, targeted personalised store promotions and so on.
“Friction is a technology problem,” added Kronenthal.
It’s more of a problem as post-pandemic consumers download more and more apps and expect a digitally-enabled service right through to picking up online goods in-store or being recognised when they arrive for an event or looking for a bargain that they’ve heard about on social media.
That is why aligning your technology is a must in today’s environment. Technology can also improve the check-out experience and tailor CX and payment options for luxury goods or the mass market.
Ways to pay are proliferating as well with buy now pay later (BNPL) joining card, cash and contactless Point of Sale (PoS) options, alongside Pay-by-Bank possibilities in the Open Banking environment increasingly evident in the UK.
This initiative, reflected around the world, relies on open application programming interfaces (APIs) as a means of easier data exchange in order to power new connectivity between providers, consumers and payment processors, among other users.
Fellow panellist, Sulabh Agarwal, MD of global payments at Accenture, commented that: “Apps, online and in-store must all tie together” in an “end-to-end holistic manner” that makes converting sales and sharing valuable data much easier.”
“Orchestration of this complex environment will become a much more prevalent issue for retailers, banks and other in the future as on- and off-line commerce merges and the rise of digital super apps advances.
Retailers’ technology estates and data mastery have to be flexible enough “to differentiate yourself in future”, added Agarwal, while also being prepared for the digitally-enabled and connected offering that is needed to succeed in the 21st century.
“An omnichannel capability will be the competitive advantage of the future,” he concluded.
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