After a Japanese adventure at Walmart, top retailer Lionel Desclée is back in Belgium. The former manager at Delhaize Group has amassed an impressive experience in the retail industry, and is itching to dive into a new adventure. “The future lies in a combination of omnichannel and hyper-local”, is his vision on the path forward for the retail industry.
Tom&Co and Bpost
“After the successful transformation of Walmart in Japan, I had very nice opportunities at Walmart back in the United States”, Desclée says in an interview with RetailDetail. “But I returned to Europe for family reasons and I am now considering new challenges, always based on my passion in retail.”
Not that Desclée is taking a sabbatical: he is already advising a number of companies in Europe and Asia that like to tap into his experience, he is still involved with Belgian pet store chain Tom&Co - in a strategic role as a board member - and on top of that, he was recently appointed to the board of directors at Belgian postal service bpost. “I take this opportunity to dedicate more of my time to those boards”, Desclée says.
Japanese success after turbulent start
He looks back on his Japanese adventure with satisfaction, even though it had a turbulent start. Desclée was the fourth CEO of the business in five years, in a company where customer satisfaction was well below par. “It is a very complex business with about 330 stores ranging from small convenience stores to massive hypermarkets. It is a big operation, totalling 7 billion dollars in sales, generated by about 35,000 associates.”
Desclée did not waste time: it quickly became clear that the business would benefit from local shareholders, alongside Walmart, but also that the company's performances needed to improve significantly in order to attract interested parties. “The company was facing serious challenges, but it also had unique strengths to leverage on: a strong corporate culture, knowledgeable and motivated associates, good locations, a promising joint venture with eCommerce giant Rakuten - just to name a few”.
Focusing on these strengths and the power of Walmart marked the start of a successful transformation: “Through focus and dedication, our market shares soon started growing again. Over a period of two years, both our associates and customer satisfaction improved drastically. And our profitability improved 40 % as a result”, Desclée recalls.
Rakuten, the Japanese Amazon
When it was decided to open shares to local shareholders, Japanese powerhouse Rakuten became one of them. “We already had a partnership with Rakuten, but it was very limited”, Desclée remembers. “But Rakuten is a massive ecosystem. You could call it the Japanese Amazon. Out of the 130 million Japanese inhabitants, roughly 100 million are in some way connected to Rakuten.”
“There was massive potential to leverage the network of Rakuten, including their user customer data and our transactional data, but this would be easier to execute with& an equity relationship”, Desclée explains. Ultimately, Rakuten invested in Walmart Japan, alongside private equity firm KKR. Walmart remained a minority shareholder and reinvested part of the proceeds directly into Rakuten. “With that in place, Walmart Japan is now well positioned to become the leading omni-channel retailer in Japan”.
With that success story in his back pocket, Desclée is back in Belgium, a country that seemed to only notice him during his tenure over at Tom&Co. “It is not in my nature to look for the spotlight, and obviously being abroad as much as I did has kept me out of the scope of the Belgian media.”
IT and offices
Meanwhile, things are going well over at the pet store chain, which Desclée carved out of Delhaize Group along with Thierry le Grelle when Delhaize merged with Ahold. Desclée remembers the massive job he encountered: “Tom&Co was not a standalone business at that time. We had to figure everything out, from IT to supply chain to something as basic as office space.”
“But at the same time, the teams transformed the chain into a stable and growing business, and after roughly two years I was able to take a step back to a more strategic role. Tom&Co is now a healthy and sound business. It grows well in Belgium, France and Luxembourg, thanks to dedicated associates and dynamic franchisees”.
Social commerce instead of e-commerce
With everything Desclée has seen and done, he is uniquely positioned to evaluate the present and future of the retail industry, especially after the pandemic. Has this changed things for good? “Corona has drastically accelerated the trends that were already there”, Desclée points out. “Obviously, there is the massive switch to online - and we have not seen the latest there yet. China is probably ten years ahead of us, the US about five years. But more importantly: it is not just about e-commerce, but about social commerce: building an ecosystem that manages to claim more 'share of time' of our customers, not just in their grocery shopping.”
Another big challenge ahead, is the ageing population. Something Desclée has experienced first-hand in Japan. “That was new to me”, he adds. “It will become part of the future in the Benelux and Europe as a whole. New services, more emphasis on fresh and healthy food, but also different types of products. In Japan, we sold more diapers for adults than we did for babies.”
Rethinking supply chains
Finally, the pandemic has caused a remarkable shift in the way supply chains are being organised. “Whereas previously supply chains were organised to be as lean as possible, with as much just-in-time deliveries as possible, suppliers and retailers are now putting more focus on securing the supply of products and potentially build up inventories to ensure continuity in the supply chain. In that sense, the rush on raw material we observed recently has some similarities with the rush on toilet paper we saw in stores during the first weeks of the pandemic. Asian countries are also reserving more and more of their massive production apparatus for domestic purposes. This all has impact on prices and inflation”.
Many businesses started evaluating the globalization of their activities. Some decided to “reshore” production to avoid new disruptions. Buying local became the new buzzword. But at the same time global corporations such as Amazon and Alibaba continue to grow. Is the future one of local champions or global titans? “I believe in a combination of omnichannel with hyper-local”, Desclée nuances. “Building an omnichannel ecosystem requires massive investments that the largest player can do. But at the same time, there is room for hyper-local retail initiatives, with a real link between shopkeeper and customer. It is not a matter of one or the other: both have a future.”
With all that in mind, what advice would Desclée give to young managers and/or entrepreneurs in the retail industry. “It is all about humility”, says Desclée. Everything changes all the time and very fast. One minute, you could be winning. And the next one, you end up on the losing side without ever noticing that the winds were starting to change. Be curious, take risks. Success never comes from you alone, it is always a team effort. The best thing about retail is how you can achieve extraordinary things by getting the best out of the people around you.”