R. Fitch: “The department store was as important an innovation as the internet”

Innovate or capitulate

Rodney Fitch – who has advised some of the world’s foremost retailers such at Marks & Spencer, Best Buy, Ikea and Tesco – currently is professor of Retail Design at TU Delft and will be guest speaker at the RetailPodium for the first time on Thursday 5 September. During the session he will talk about ‘Innovate or capitulate’

The retail sector has always been very innovative in response to changes – social, political and economic. Numerous forms of innovation play a key part in successful retailers meeting those changes. Remember the rise of department stores, shopping centres or the internet – all responses to contemporary challenges. How should a contemporary retailer respond to challenging changes to remain relevant?

The second session, ‘Shopping – a society good?’, will take place on Friday 25 October and will look for the social value of shopping. It not only fulfils the immediate needs of the consumer, it also provides them with choice and convenience. But does shopping also contribute to welfare and a better life, or does it encourage excessive consumption and non-sustainable behaviour?

Fitch takes us on a historical journey from the start of shopping to the shopping of today and draws lessons for companies that want to prepare for the future.

Retail has to follow social change

Fitch: “Commentators often suggest that retailers make the decisions and consumers follow, but in fact it is the other way around. Look at the history of the industrial revolution: as people from the country moved to the city in large numbers, new concepts of manufacturing goods were created and a new form of retailing had to be created to meet demand.”

Ever since, to be successful across diverse social changes, the retail sector has to innovate constantly. “Only one retailer can be the cheapest, all others must find forms of innovation to compete. That is definitely the case in a world where the internet and mobility has made the consumer less loyal to brands. In such a promiscuous landscape retailers have to distinguish themselves by offering ‘added value’, in order to keep their customers involved. Through an innovative approach before, during and after the purchase, they have to keep their customers connected and committed.”

That innovative approach is a blend of products and services, technology, design and communication. That can involve both emotional and practical considerations: “Consumers  have 25 products in their shopping cart, they want to be able to put them all on the conveyor belt, so they can be scanned individually, but they don’t trust the technology that says they can all be scanned at once, by moving the cart through a little gate. We have the technology, but solving this human emotional problem, is also innovation.”

“The technological and commercial innovations we have known in retail, are huge. But they can only be successful if they take social evolutions into account. It is and always will be the consumer who decides”, says Fitch.

The final quarter makes the difference

Is there a difference between the consumer in the West and the consumer elsewhere? Fitch: “Tesco had its shopping wall – where the consumer can scan QR-codes of products using his smartphone, so he can later pick up his order at his local department store – first tested in the East and later in the West. This was not because of the availability of the technology, but because of the differences in society, East and the West. They were more open to it in the East.”

“The large retailers do things 70% – 75% the same all over the world. But it is those other 25% – 30% that make the difference and decide whether they are successful locally or not. In Asia the element of hospitality, family engagement and entertainment in shopping centres is often as important as the shopping itself. This is not so critical a case in the West.”

Internet does not make manufacturers into retailers

For our generation the internet is an important innovation. Will it not cause producers to be much stronger when it comes to selling their products directly and circumventing the middleman? “I do not think so. On the contrary: reliable research suggests online sales will peak at 30% to 35% of total retail sales. That leaves 70% elsewhere and though the impact of the internet on the retail sector is huge and transformational, much physical retail will continue to thrive. Furthermore we can expect substantial innovation from the physical space, driven by competition and technology.”

“I do look with great interest at what is happening at Spitalfields a district in East London. Because of cheaper housing, the presence of bars and clubs, it has drawn a young population and it gives a reliable insight into how modern people behave – their preferences, attitudes – their Zeitgeist!  In a Spitalfields landscape, it is as easy to start a small physical shop, as to sell through the internet; perhaps easier, given the more direct contact with these unique customers. And people continue to find the shopping experience important. For many it can be the most important activity, which is why I often claim that shopping is even the purpose of life!”

Prof. Rodney Fitch will be speaking at RetailDetail’s inspiration platform RetailPodium on September 5th and October 25th in Antwerp, Belgium. For more information or reservations, go to www.retailpodium.be.