Global Powers of Retailing
Transformative change, reinvigorated commerce
It is a transformative time in retail. The shopper is clearly in the driver’s seat, enabled by technology to remain constantly connected and more empowered than ever before to drive changes in shopping behaviour. “Everywhere commerce” has taken root, allowing consumers to shop however, wherever, and whenever they want—whether in stores, online, by mobile, voice activation or click-and-collect.
Across the retail industry, disruption of traditional business models has given way to unprecedented and transformative change—change required online and offline to better serve more demanding shoppers and redefining customer experience. Innovations and transformations are happening faster and at a greater magnitude than ever, presenting challenges for retailers accustomed to balancing conventional performance metrics like growth, profitability, and space productivity.
The two opening paragraphs of Deloitte’s Global Powers of Retailing 2018 report could not have been truer for the Belgian retail industry in 2018.
For the last five years, Belgian consumers have been lagging behind their neighbours in terms of e-commerce. In 2017, however, we started to see the first signs of maturity in internet retailing in Belgium. It is estimated that Belgium’s e-commerce has generated a turnover of 10 billion euro in 2017, with 63% of Belgians having made at least one online transaction in 2017 —this represents three quarter of the population having access to the internet (88% internet penetration), showing that online retail is becoming more familiar. In the third quarter of 2017, online purchases represented 8.7% of Belgian consumer spending on products.’
Mobile commerce is an important driver of e-commerce growth. As Belgian consumers are increasingly looking for seamless integration across channels, online commerce is no longer limited to desktop PCs. According to Deloitte’s Global Mobile Consumer Survey, 41% of Belgian smartphone owners browsed shopping websites or apps on a monthly basis in 2017, a 12% increase compared to 2016. 18% made at least one mobile purchase on a monthly basis. This means that although mobile purchases remain marginal we increasingly take our smart devices out of our pockets to browse shopping catalogues.
The rise of e-commerce in Belgium has influenced competitive forces in the market. Given the increased attractiveness of Belgian e-commerce, online retailers are increasing efforts to serve the Belgian market: Amazon has recently unfolded plans to build a warehouse at 50km of the Belgian border, Bol.com is building a new fulfilment centre in the Netherlands to serve both the Dutch and Belgian market, Coolblue has launched its own delivery service in Belgium, and Zalando is testing a partnership with Belgian delivery start-up Parcify.
However, despite popular belief, the rise of e-commerce does not mean the end of physical retail. 90% of consumer spending on products still takes place in physical stores. The future of retailing will therefore be more “phygital”, a seamless integration of physical and digital channels. Click-and-collect, for which 15% of Belgians are already opting, is one of the ways to put phygital into action.
To respond to customers’ phygital expectations, retailers are transforming their business model in Belgium. Both IKEA and Carrefour are privileging e-commerce above expanding their store footprint, Decathlon is testing a city-store concept in Brussels focused on city sports in which gear for other sports is still available through click-and-collect, Carrefour will refocus on convenience stores rather than hypermarkets.
As retailers rethink their business models, they need to redefine the purpose that physical retail touchpoints play for their brand. For that, retailers need an in-depth understanding of the full customer journey (i.e. the journey customers take from the moment they hear about a brand or product, to the actual purchase and service afterwards), to define in which phases of the journey brick & mortar stores are most relevant to meet customer needs. Increasingly, the most innovative brands focus their store concepts on the first phases of the journey, making customers aware of the brand and what it stands for, and enabling customers to find relevant and personalised information in an easy to digest way. Prada, for example, has opened a first store in Brussels, where the choice of the interior decoration is subtly putting forward the classic style with modern character of the brand. The walls and chairs are covered with green velvet and the beams on the ceiling are painted green, while marble displays bring forward the brand’s modern touch.
So, what’s next for Belgian retail in 2018?
First of all, we expect to see an increasing number of partnerships between retailers. Bol.com and Amazon have opened their marketplaces to other suppliers, and Media Markt is now taking care of the electronics department of Makro.
Secondly, retailers will intensify the integration of physical and digital touchpoints, seeking to make the omni-channel shopping experience truly seamless and integrated across all channels. Coolblue, that started as an online retailer has recently opened a third physical store in 2016, and launched its mobile app in October. Next year, Coolblue plans to open its XXL store concept in Belgium.
Finally, we can expect the in-store experience to be enhanced further through digital experiences. Biometric technology, AI & self-learning machines, computer vision and Internet of Things are a few technologies that are being tested intensively in Retail worldwide. We expect more and more retailers to think about which of these technologies fit best with their store’s stories, and to integrate these technologies rapidly. Decathlon, for example, plans to add product scanners in its fitting rooms in the Brussels city shop, allowing customers to see availabilities in other colours and screens to request assistance from shop staff.