We recently had the opportunity to speak to Leo van de Polder, the global development director at Shop! With his extensive experience in retail, Leo is a recognized leader in the industry. His expertise in Marketing Management, Communication and Design, and Sustainability makes him a sought-after professional in the world of retail.
In this interview, we'll explore the current state of the retail industry and gain valuable insights from Leo on key challenges, opportunities, and emerging trends shaping the future of retail.
1. Q: Can you provide an overview of the current state of the retail industry, especially in light of the recent economic and societal shifts?
The retail landscape is constantly evolving due to economic and societal changes. In particular, the COVID-19 pandemic sheds light on critical factors such as health, safety and well-being. The retail market is currently witnessing a growing emphasis on sustainability, which isn't just limited to product-based sustainability.
Younger consumers are more aware of these issues and want to associate themselves with brands that can deliver on their promises of sustainability, well-being and safety. It is therefore more important than ever for retailers to incorporate these elements into their retail strategies to keep pace with the current state of the industry.
For more insight into the current state of the retail industry and the latest innovations in retail, spanning from smart technology and sustainability to personalization and omnichannel strategies, download our latest retail trend report.
2. Q: What are the key challenges and opportunities in the retail shopping market in 2024 and beyond? How are retailers responding to these challenges and positioning themselves to capitalize on these opportunities?
One notable opportunity is the increase of technology in day-to-day retail activities, which serves both as a data collection tool and to enhance customer shopping experience. Artificial Intelligence (AI), is at the forefront of this trend, offering benefits in areas such as design, marketing, inventory management and theft prevention.
Retailers should leverage the latest tech trends like AI to create a more personalized and immersive shopping experience for their customers. By doing so they can enhance customer satisfaction, drive sales and provide valuable data-driven insights to optimize business operations.
Leo further emphasized the element of well-being in the retail sector. Fusion retail, which merges hospitality with traditional retail, is becoming more prevalent today. The concept of re-commerce is also on the rise, focusing on sustainability and shared consumption. Tapping into these opportunities can help appeal to more eco-conscious and ethical consumers, while simultaneously creating new revenue streams.
If retailers overlook these opportunities, they may miss out on potential benefits. This could include maintaining or increasing market share against competitors who are using technology effectively and responding to changing consumer preferences. Similarly, not embracing trends, such as sustainability and shared consumption, could affect your brand's reputation by reducing trust among environmentally conscious consumers.
3. Q: What are the most disruptive forces in retail? How will they shape the future of the retail industry?
The most disruptive forces in retail are customers and their ever-evolving behavior. As a retailer, there is a continuous need to keep up with consumer preferences. While external factors can have a significant influence on consumer behavior, it is critical to recognize that long-term changes are the result of evolving customer preferences.
Retailers should prioritize a more customer-centric approach. This involves continuously monitoring and responding to the changing consumer demands.
4. Q: We have witnessed a significant rise in e-commerce; how do you think traditional brick-and-mortar retailers can stay competitive?
“I call it the human-centered design. You create an environment where people are happy and want to spend time.” Leo talks about how important it is for brick-and-mortar stores to capitalize on areas that e-commerce platforms struggle to replicate. This includes prioritizing well-being, creating a sense of community, and providing a more personalized experience for your customers.
By shifting from a push to a pull strategy, you can create a holistic shopping experience. This ensures that customers feel valued, satisfied, and are more likely to return.
5. Q: What do you need in today's world to become one of the most influential brands in retail? What do you need to let go of to stay relevant?
In today's retail world, becoming one of the most influential brands means prioritizing authenticity, consistency, and delivering on the promises you make to your customers. “One of my favorite retailers right now is Rituals. They do a great job at selling experiences, not just products.”
“Anyone can be omnichannel, but as long as you're consistent throughout all those omni channels, that's the key to success.", says Leo. Whether it's retail, wholesale, or hospitality, the goal should be to deliver a consistent experience across all channels. While your brand needs to have a strong omnichannel presence, brand consistency is what puts you on top. A great example of this is the Rituals flagship store in Amsterdam. It combines elements of wellness, such as yoga and food, with product offerings to create a holistic experience for its customers.
6. Q: In your presentation, you talk about technology and in-store data in retail. How are retailers leveraging technology to enhance the customer experience both online and in-store? What are your thoughts on emerging trends like Artificial Intelligence (AI), Virtual Reality (VR), Augmented Reality (AR) and the Internet of Things (IoT) in retail shopping?
Leo agrees that technology plays a critical role in enhancing the customer experience, both online and in-store. Today, retailers are using various technological tools to create a more personalized and immersive experience for their customers. But he argues that technology in physical retail is still in its infancy, with plenty of room for growth.
However, Leo also highlights the need for retailers to consider how they measure the impact of these technologies carefully. "Sometimes digital sounds very sexy. But what is it for? What's in it for me? Does it bring me more sales? Does it bring me more profit?"
Technology integration should serve a clear purpose of improving customer satisfaction and loyalty, not just be implemented for the sake of innovation and keeping up with industry trends.
In line with Leo's insights, digital signage is emerging as a powerful tool in retail shopping. It offers a dynamic and interactive way to engage with customers and enhance their shopping experience. By strategically integrating tech like digital signage into physical retail, retailers can further elevate brand presence and drive sales. To read more about the power of digital signage in retail shopping, click here.
7. Q: What role do you see data analytics playing in the future of retail? How are retailers using data to make informed decisions?
Leo talks about how data analytics will play a big role in the future of retail due to the advancements in technology that are generating massive amounts of data. He says, "The challenge for retailers is to make this data operational and translate it into actionable strategies".
Retailers can use different methods to collect data, ranging from the use of eye tracking, traditional entry and exit interviews, mobile technology to behavioral and neuroscience.
The method they choose depends on the desired outcomes and the specific insights they want to gain. For example, when investigating the effectiveness of an in-store display, several metrics can be considered. These might include its ability to engage customers, drive sales, or increase product awareness. "But do you know what you want to measure? That depends on whether your focus is on visibility and/or engagement of the in-store display or financial aspects such as revenue generation or cost analysis.", says Leo
Ultimately, the approach to using data in retail depends on how retailers or brands define success.
8. Q: What according to you would be good metrics to gauge if the technological elements that you put into your store are working in your favor?
Measuring return on investment (ROI) is an effective way to measure the effectiveness of in-store technologies. It involves tracking costs from the initial brief to the final implementation. As a retailer, this can help provide a clear picture of all the expenses involved.
Every aspect of this process must be carefully measured to determine the true ROI. This includes the time spent, any additional resources used, and the actual cost of execution. By taking all these factors into account, you can accurately measure whether the technology you are using is producing the desired results and making a positive contribution to your business goals.
9. Q: A study by Harvard Business Review found that customers who had a personal interaction with a staff member were 23% more likely to return to the store. In recent years we have seen a shift towards creating a more convenient retail shopping experience for customers, for example, self-checkout services. This can reduce the number of one-on-one interactions with customers. Do you think the idea of convenience is negatively affecting customer loyalty by reducing personal interactions?
"I agree. It is key, especially now. So much of your life is online, so the need for human interaction is going to increase." Leo talks about how human interaction is becoming increasingly important in a predominantly online world. As people spend more time online, the value of human interaction increases, especially when it comes to physical retail.
Retailers should not neglect to invest in in-store staff. Well-trained and attentive staff can make all the difference. They help improve the customer experience by providing guidance and assistance. This, in turn, drives foot traffic and sales.
Digital advances such as self-checkout may offer convenience, but they can't replace the human touch. Leo continues, "I was in Japan in November. I walked into the hotel and there was a little robot saying hello. It was fun for a minute, but I missed the human touch." Convenience is important, but it shouldn't come at the expense of personal interaction, which remains critical to customer retention and satisfaction.
10. Q: In your presentation - 'Enhancing retail environments and experience'- you state that 45% of Gen Z have stopped purchasing certain brands because of ethical or sustainability concerns. This shows that sustainability and ethical concerns are becoming increasingly important to consumers. In addition to offering sustainable products, how are retailers integrating sustainability and ethical practices into other aspects of their operation, such as packaging, transportation and energy usage?
"It is somewhat hypocritical to promote sustainable products while neglecting the environmental impact of the store itself," says Leo. Retailers should focus on bringing sustainability to all aspects of their operations, not just the products they sell.
“REI is an outdoor chain in the US where almost 70-90% of the fixtures, signs and lighting in the stores are sustainable. We need to see more of that kind of commitment to sustainability, a more holistic approach."
Many companies talk about sustainability, but much of it has been greenwashing. But as awareness grows, especially among younger generations, we see a shift toward more conscious consumption. Retailers and brands should consider sustainability at every stage, from design to manufacturing and beyond. This includes designing with end-of-life in mind and implementing standards to measure sustainability impacts throughout the process.
Ultimately, sustainability is not just a trend, it's a necessity driven by consumer demand. Retailers, brands and their suppliers must adapt to this shift by making a genuine commitment to sustainability and demonstrating their actions through transparency and accountability.
The Sustainable Design Guide offers practical insights into sustainable in-store design solutions, efficient packaging practices, energy-saving strategies and more. Find the right balance between promoting your brand and being responsible with a holistic approach.
To download the guide, click here.
11. Q: The concept of "retailtainment" has gained traction in recent years. How are retailers incorporating entertainment elements into their stores to create memorable shopping experiences?
Retailers must first define what entertainment is in their retail environment, is it simple or extravagant? Because the interpretation of entertainment can vary from person to person.
Leo describes retailtainment as "creating an atmosphere that consciously or subconsciously evokes positive feelings. It could be happiness, ease or luxury. It depends on what the retailer wants to convey through the experience."
The key is to understand what evokes positive emotions in your customers that will keep them coming back for more. It could be as simple as Nike or Zara's new store in Rotterdam, which focuses on showcasing luxury or convenience rather than extravagant entertainment. Or as grand as creating immersive experiences like the Hamleys' store in South Africa, where every corner engages shoppers with interactive displays, animated characters and compelling installations.
It is crucial to understand your target audience and tailor the retail experience to evoke emotions that resonate with them.
12. Q: What are your top insights for creating a powerful retail brand?
According to Leo, there are four key elements to building a strong retail brand: understanding the solution your brand provides, the purpose of your brand, delivering on the promises you make to consumers, and using all available channels to reach your customers.
• Clearly define your solution: As a retailer, you need to understand what problems your brand solves for your customers. This information can then be used to align your offerings with their needs.
• Define your purpose: Define your brand's mission beyond just selling products. It could be innovation, creating a sense of community, or sustainability.
• Provide tangible proof of your promise: It is important to back up your brand's promise with tangible and data-driven results.
• Leverage all channels: Create a strong omni-channel presence. Be where your customers are. This can include social media, e-commerce platforms, physical stores, and any other platform where your customers can be reached.
Designers also play a critical role in capturing and presenting the true essence of your brand in-store. To create an inviting environment, retailers should consider factors such as materials, shapes, colors and flexibility. "I believe that design will continue to play an important role in shaping the retail environment and strengthening brand identity," says Leo.
The indoor marketing guide offers practical insights into capturing and replicating the true essence of your brand at key retail locations. Check out the guide to gain valuable tips on maximizing brand visibility indoors with key tactics, real-life examples, and smart product solutions. To download the guide, click here.
Conclusion
The interview with Leo highlights the need for retailers to adapt to changing consumer preferences, which are the most disruptive forces in the market. There is an urgent need to focus on factors such as health, wellbeing, safety and sustainability, especially as younger consumers become more conscious shoppers.
The emphasis on sustainability also demonstrates its importance in attracting and retaining environmentally conscious consumers. The key is to take a holistic approach to sustainability. Leo's insights underscore the benefits of data analytics for informed decision-making. Metrics such as ROI and customer satisfaction are critical to measuring the impact of retail strategies.
It is worth noting that, while technology can help drive customer engagement, it cannot replace human interaction, which remains critical to customer retention and satisfaction.
In an industry currently experiencing the rapid rise of e-commerce, traditional brick-and-mortar stores can remain competitive by capitalizing on areas that e-commerce platforms struggle to replicate, such as creating a sense of community and providing a more personalized experience.
Leo talks about how building a strong retail brand requires a clear understanding of the solutions offered, a defined purpose beyond sales, tangible proof of the promises made, and a strong omnichannel presence.
He concludes that as the retail industry evolves, it is essential for retailers to remain flexible, sustainable, innovative and responsive to changing market trends.
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