Steve Lister: A Convenient Truth - the Evolving State of Retail

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Steve Lister is the Innovation & Sustainability leader at Konica Minolta Marketing Services. His role is to inspire brands, marketing teams & retailers to find new, impactful marketing ideas for on-brand print, packaging and point of sale solutions.

In his role, he works closely with brands to source new sustainable & innovative materials for retail applications. Part of this process is to train and advise end user brands, marketing teams, retailers, designers and their print & manufacturing supply chains to achieve their goals.

In terms of printing it is all retail focused and in order to bring to life innovative campaigns, Steve and his team will work with 1500 different print service providers across Europe with a specialism for print or marketing from corrugated printing to commercial printing.

Steve, retail is changing. In the US, something like 6,000 stores have closed in 2017, do you see this happening in Europe?

Yes the USA is experiencing quite radical change. This is in part due to the structure of retail in the country which is quite different to Europe’s. The model for your typical retail store in the US is vast, large scale, with a broad base of stock, whilst being focused on value. The scale is huge and the margins are small. Therefore, it only takes a relatively small percentage swing in demand and shops have to close. This is happening now.

In Europe, we do not see the same contraction of retail as the structure has always been different. Plus we have been through the first wave of retail closures after the recession. We will possibly see more in the future, but right now the balance between online and physical stores is approximately 50/50. The UK is the leading European online economy with 54% of retail purchased online. And there are clear reasons as to why this is the case. In the UK, there is great broadband, with next day delivery pretty much all over the country. The system works well. It is cheaper for us to sit at home due to expensive petrol and the associated costs of shopping. We also have a system of free returns and if we don’t like something we buy then we can return it the next day.

This is in quite stark contrast to Italy which only has 5% online. They just don’t have the structure or system. It is also cultural as Italians like to shop and socialise. This demonstrates nicely that Europe, of course, is far more fragmented than the US.

We are seeing that consumers will go to shops to see the product, but then may order the product online. And a lot of stores now don’t carry full ranges of clothes and won’t necessarily have what you want in stock, so ordering online gives you access to a larger range of clothes. I really think we are at cross roads for retail between online and physical. Both will continue, but the shift to online retail is forcing the physical store to adapt. And this, of course, means print has got to change as well.

Online retail is growing, how have other consumer changes impacted retail and more specifically print?

Retailers know they have to adapt their offering to complement their online proposition. Social media and smart technology now define our lives. Therefore demand for mass personalisation is something we expect. When we are online we take for granted the marketing we consume is tailored to our search history and print has to be the same and fit within this new world order so it reflects this new level of sophistication. It can be done, but this requires thought, expertise but also a willingness to give new ideas a try and it is those that are willing to give things a try who will survive and succeed.

But of course this will mean we will see some retail casualties – as some won’t respond to this new world – they either will not develop their online offering enough or their physical model won’t adapt enough. The reality is that before long the predominant generation will become the millennial. And they spend all of their time online. They are more comfortable to give away their data readily and this is what the future will be like. 

Direct brand-consumer retail will continue giving consumers unique experiences 

Direct brand-consumer retail will continue giving consumers unique experiences 

So with this in mind, the experience will remain important. People will like to shop and be seen to shop at the right places, buying the right products that reflect their individual values. And this is not just a female thing, lads are also shopping more at the places that they deem are right for them but the emphasis is experience and social validation. And for them it should be fun, and not a chore.

Brands are recognising this and yes there is an increase in brands defining their own experience by creating their own retail experience with their own shops so they can build up a better, more direct relationship with their customers. Nike was one of the first brands to recognise and initiate this kind of thing. You see brand stores now more than you see collectives opening up. Brands are definitely seeing that value and for them and consumers it really isn’t about price – in fact, it is the opposite. Millennials and Generation Z’s need to copy their idols and are wearing expensive goods and want the same, or as close to it as possible. Retail is evolving, and nicely at the moment in this direction. Of course, in store print is used to create the experience, and reinforce the brand by creating textures and ambience. Not to interrupt a shopper with a special price.

Value retail is growing and this isn't only due to price, people like the simple experience 

Value retail is growing and this isn't only due to price, people like the simple experience 

Is this also the case for supermarket shopping?

The only area within retail that it is not focused on experience is grocery. Retailers have developed very clean and functional places where the emphasis and priority is on restocking and remerchandising. So food shopping, therefore, is rarely an inspiring experience. I recently posted (on linked in) a picture of a bread aisle. An astonishing 17,000 people have looked at that photo! And people gave me some great feedback and responses. But although this aisle is easy for the retailer to manage, many people found it boring and unhelpful.  There was no differentiation between brands. So for the retailer, it is easy, but for the consumer, it is boring and confusing. So grocery retailers need to think about experience particularly as many shoppers are moving away from large store shopping to convenience stores for ‘topping up’ and one of the main reasons for this is we don’t any longer want to do a large weekly shop. Because the experience is seen as unpleasant. 

Extreme convenience. Amazon Go enables consumers to 'grab and go'.

Extreme convenience. Amazon Go enables consumers to 'grab and go'.

On average, people visit a big supermarket 100 times a year. But now we are moving to convenience stores and spending only a small amount of time, but our shopping frequency is increasing to 200 times a year on average. But your time in the store is small and you will only cover 13% of the store compared with 43% of a supermarket. This changes everything – how you package, how you place, and you pre-market, and this has an effect on the shape of a package and point of sale display.  We are using much more thin and tall displays for example. 

This move to convenience has changed everything and beforehand you need to influence the customer’s journey. We have seen other data that shows that hanging displays as people don’t look at them. Many shoppers will focus on their phone. We are saying to people, think about the assets you produce as they are no relevant now as they were in the past.

With this change, how do you help your customers?

We work a lot on understanding the customer journey. This has a massive impact. For example, why invest at print displays outside of a shop, when people are not even in shopping mode yet and this is the thing for us that we have to recommend to clients where they invest etc.

Demand for print is changing and evolving but it remains as important as ever. It is still a visual business. Shoppers still want to see attractive things, but it has to be far more clever and sophisticated than before. It has to compete online as people are now more informed before they arrive at the store. No-one really shops without a clear objective as we have the online tools to do so. These days most non-grocery decisions are made before entering the store.

Are we moving to Smart Retail? 

I think we are 5 years away from AR being fully embedded with retail. The Apple iPhone 8 will have AR built into it. It is still niche but growing and it will move that way we think.

Do you think the creative industry understands the potential of digital printing?

No, I don’t think so and given the fact that millennials are moving into the positions to deal with these issues, an event like Pure Digital is really important. This kind of knowledge is really important as retail is changing all the time and digital printing can really make a big difference to a campaign if used to its full potential. 

The future will see drone delivery

The future will see drone delivery

What about the future?

We are working with software that tracks consumer eye pathways. This helps us to manage where to place print to optimise the opportunity that the message gets seen by a consumer and the possibility to influence, inspire or persuade a purchase is still there.

Going forward, this is something we want to grow as it supports the future of effectiveness for print and for marketing. We live in a fast world and the distractions are greater than ever before. We have to make sure we make the best use of our assets and use every tool that we can to make sure that we optimise the science behind the art of marketing.

We have to make sure any marketing resonates with the customer at every part of the customer journey – before they make it into the shop. And we need to make sure that everything they see resonates with them inside the shop as well. The days where you would send out a mailer and hope for the best are well and truly over. Retailers, brands and also printers need to rise to this challenge. Only those that can evolve and innovate will survive and thrive in the future. I fear the rest will simply get left behind.