Professor Koen Schoors: “Local retail needs to better advertise its added value”

Professor Economics Koen Schoors (Ghent University) urges retailers to break out of their “business as usual” cocoon: “The sector needs to rethink what it sells and how it is selling. Those who continue to focus solely on product ownership, will be left behind.”

Who makes your goods?

It has been clear for a long time that everything in retail is changing, but does the sector realise that actually, everything is getting better? Koen Schoors, professor Economics at the University of Ghent and author of the book Everything is Changing, envisions a future that is 100 % circular and regional. Not only is that more sustainable, it also yields more profit in the end, he says. At the Captains of Retail event on 17 September, he will explain how.

Schoors argues that there is still a need for more awareness, especially among the retailers themselves. The professor points out that, unless heavy taxes are imposed, players like Temu and Shein will always be cheaper. European companies have to prove their worth by focusing on added value: “Not enough retailers tell their story. Dovy makes a point of telling me – in every ad – that they make my kitchen in Belgium. But why are they the only one? We need to show consumers how much value is created locally.”

From ownership to usage

Whoever says something is not possible, is just not thinking creatively enough, Schoors says. It is very clear to him: the classic model of selling products is finite. Online competition, demographic shifts, the energy transition, and the circular economy are putting pressure on the traditional retail model anyway. “Why would you own a suitcase if you only use it once a year?”, he wonders. He refers to Decathlon as an example: “They already offer tents and bicycles through rental schemes. That is the ‘product-as-a-service’ model: less need for raw materials, more sales.”

The professor sees the same movement in the white goods sector. “Some operators offer installations in a kind of rent-to-own scheme. That is the future. The consumer buys a service, not a device.” This applies equally to food, where initiatives like meal box service Foodbag respond to consumers demanding convenience, health and local production.

Scale, service or experience

“If you continue to only sell products, without a story, without a service, without an experience… then you will simply be out-competed”, Schoors puts it bluntly. He sees three possible future models for retail:

1. Economies of scale: chains that operate efficiently thanks to distribution and logistics

2. Experience: stores as meeting places, where shopping goes hand in hand with relaxation

3. Service: rental, maintenance, bundles – everything that adds value without ownership

The fact that globalisation is making way for regionalisation does not eliminate the possibilities of scale. On the contrary: there is much more collaboration possible. The economist is surprised, for example, at how many roofs of large stores remain empty. “They could be used for solar panels or wind turbines… things that can not only generate energy, but also strengthen the relationship with the neighbourhood. Besides personnel, energy and buildings are the largest cost items for retailers. It is incomprehensible that this is not happening on a large scale.”

Circular flows are also organized locally. “You can not really send used diapers or recycled clothing back to China.” He sees it as ironic, but not unexpected, that Trump and other populists are accelerating the circular process. “Even conservative regimes are opting for renewable energy, simply because it is cheaper.”

Scarcity as an Opportunity

According to Schoors, the circular economy often gets stuck in symbolism. “Sustainability has nothing to do with tree huggers or compost in the garden. It is about material flows. About systems.” He points to innovations in textiles such as Resortecs, which developed meltable yarn to make clothing easy to recycle. “If we design with reuse in mind, we can utilise materials more efficiently and create local value.”

He dismisses the criticism that Europe would be too expensive for this. “But low-paid jobs in the warehouses of e-commerce giants are okay? Sorting, recycling, and processing can also be high-tech. Less cheap labour, more smart labour. The demographic reality is that young people are scarce – get used to it. This also applies to people at the checkout or on the shelf. Those who are still around, will demand more.”

Automation is therefore inevitable, but nuance is needed there as well. “I do not see robots taking over immediately. Retail is digitising, but much of that means the customer now has to do the work themselves. Think of online banking: in the past, you went to the counter, now you do it yourself. But it does not take less time…”

Sustainability without blaming

His conclusion is clear: “Those who organise sustainability smartly, will win. They will do so not because they have to, but because they make it work.” According to Schoors, the biggest mistake in sustainability has been the communication. “We have messed it up with the blaming people. They are not interested in ‘having to do something’. They want something that works, is affordable, and is fun.”

Moreover, he says, sustainability is often just cheaper: “Electric cars are already cheaper per kilometre than combustion engines. Reusable diapers like Happy Nappies or the diaper collection service from Woosh cost less in the long run. And they create local jobs.”

* By invitation only. The event takes place in Dutch only.