Retailing in the Week Ahead, Week 13, 2019

It is a lot easier to see a tipping point with the benefit of hindsight than it is to spot it before it happens. Still, as retail analysts, we are obliged to take on the difficult task of placing bets on when what was true in the past can no longer be true in the present.

If you were lucky enough to join our European analyst team last week at our “Retail IQ Live” event in London you would have seen us make five big bets. If you could not make it, you can see the slides in links below as well as get my very fast summary version in the next few paragraphs.

Overall, what we attempted to do is spot changes that will force retailers to stop behaving like retailers and start behaving in new and potentially strange ways. To borrow some examples of tipping points we can look at some iconic companies like Michelin or Shell. Very few people know that Michelin’s original tyre business was designed to service the bicycle industry. A few more know that Shell began as an import-export trading business, specialising in obtaining rare seashells for interior home designs that were popular at the time. Both these companies made the leap to new ways of working. In the case of Michelin, they stopped focusing on bicycle tyres and began delivering car tyres. Likewise, for Shell, they stopped importing seashells from the Middle East and started importing petroleum.

At the IQ Live workshop, we called out two retailer tipping points which resulted in different outcomes. In the late 1890s, two retailers emerged in the American Midwest. Sears Roebuck, a catalogue mail order company, began shipping across the entire USA. The S.S. Kresge company, a “five and dime” (modern-day dollar store), started to build a chain of regional stores. By the 1960s, both companies were more famous for their large format, multi-department, retail stores, which had revenues and profits exceeding the original business they launched.

As we speak, both companies are ‘closing down’ after 120 years of trading. However, in the case of Sears, they created businesses such as Allstate, Discover Financial, and Coldwell Banker that live on in 2019. With Kmart, the businesses created such as Borders Bookstores or OfficeMax supply stores have been absorbed by competitors. The message: when companies face a tipping point, even when they compete directly with one another, they often move in different directions, often with unexpected trajectories.

With that said, as way of introduction to our “Tipping Points” in retail story, let me now talk a little about each of the five tipping points we discussed in our day-long workshop.

  1. The personalisation tipping point. The most defining retail invention of our time is the algorithm. The question is when does it make more sense to personalise retail marketing through relevant touchpoints than it does to spend on ‘Above-the-Line’ activations? The new age of AI makes it possible for retailers to filter, retarget, and launch new touchpoints everywhere. We called this session, “The new E.R.A. for Routes-to-Consumer” and focused on what suppliers can do to manage the explosion of solutions retailers are testing and introducing to markets. We believe that suppliers can spot the difference between old retailers and new retailers by listening to their solutions. If the retailer says, “My stores have loyalty cards” the retailer is most likely focused on old world metrics. If the retailer says, “We work with multiple solutions partners” there is a good chance they’ve passed the tipping point.
  2. The visibility and space tipping point. One of the most important tipping points in retail relates to physical visibility and physical space. The question is when does physical visibility no longer create the “Moment of Truth” a brand is looking for to engage a shopper? We called this session, “Redefining the Blur” and made it about the ways retailers are looking to activate shoppers now that just having good shelf placements and shelf prices are not enough to get shoppers to spend time in stores browsing aisle after aisle. We believe suppliers can spot this tipping point when retailers stop defining their stores as a channel and start defining the store as a shopping mission. They go from saying, “I have a convenience store” to saying things like, “My store is the number one lunch destination for workers on Mondays.”
  3. The big holiday tipping point. Consumers often complain that retailers are introducing [fill in the blank holiday products] earlier and later than ever. At Kantar, we have our own ‘hall of infamy’ photos of retailers trying to sell Mother’s Day merchandise in December, Valentine’s Day in July, and so on. However, no matter where you go two things are starting to happen. First, more and more expatriates and tourists are visiting.  Second, more and more compatriots are coming home (after being an expatriate or tourist). In both instances, there is a wide and growing audience for a multitude of retail festivals across the year. Gone are the days where all you have to do is land two big holidays and you make your number. Many retailers are often managing several holidays at the same time. For example, in the UK right now many retailers are managing Mother’s Day, Easter, and Bank Holiday Travel simultaneously. We called this session, “3D Retail Activation” and the key question we tried to answer was “When will retailers stop managing space in stores around one big holiday and introduce rapid and localised modular promotional spaces in stores?” We believe that suppliers can spot this tipping point when retailers stop defining their stores as “Your Black Friday Destination” and start talking about “Big Surprises for Your Important Moments.”
  4. The get healthy or stay healthy tipping point. Many retailers, especially mass-market retailers, have attempted to manage symptoms rather than diseases. For example, in Spring, when retailers want to sell lots of gardening equipment and barbecues they forget to also merchandise services related to helping you lift heavy equipment in a healthy way without getting a hernia or fail to teach consumers how to cook meat so that it is fully cooked when they are buying a new grill. In this session, called, “The Recipe for H&W” we talk about how retailers increasingly try to manage the full lifecycle of the product they are selling and help consumers manage both sides of their lifestyles (when things are in balance and when they are imbalanced).
  5. The mobile device to any device tipping point. eCommerce has moved at lightning speed as a platform that was primarily a ‘real-time home shopping catalogue’ to a platform that is part of everything, everywhere. As we move from a 4G mobile universe to 5G, digital retailing will achieve new levels of growth and appear in more ‘objects’ than we ever imagined. Some will see this as an assault on privacy or peace and quiet.  Many will see this as a better way of living. Who doesn’t want a mobile phone that can remind them where they parked their car while at the supermarket?  Better yet, wouldn’t it be great if the car could self-drive itself to the door of the supermarket after you’ve passed through the payment system? We called this session, “The eCom To-Do-List.” Our hope was that suppliers will quickly realise that managing eCommerce as an alternative channel or a channel where one eCommerce expert is supposed to give the “Grocery Channel” team one ‘to-do’ each year is a bad way forward. We believe suppliers can spot retailers that have reached the eCommerce tipping point when they can no longer schedule a meeting with the retailers’ eCommerce team because the eCommerce team and the Operations team are the same people.

Some of these tipping points may seem a long way off. Some may seem like they already passed. Either way, we hope you will think about them and either use them to motivate your internal teams to work differently or help you think about conversations with customers in new ways.

If you did not have a chance yet, please also have a look at some of our big featured items from Week 12:

In addition, if you get a chance, please share your thoughts or questions on ‘Tipping Points’, or any other topic. Good luck in the week ahead. 


Ray Gaul – and @KantarConsulting or @RayGaul on Twitter plus LinkedIn.

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