Philip Clarke, chief executive of UK-based grocery giant Tesco, has spoken of the need for retailers around the world to adapt to a new era of frenetic trading by taking advantage of modern methods of communication to develop highly personalised connections with consumers.
Clarke delivered his take on the future of global retailing at this year's World Retail Congress in London, making a case for new investment in digital technologies and calling an end to the so-called space race that has seen competing retailers rush to secure market share by building more and more new stores.
"Right now the tectonic plates are shifting," he told delegates attending the forum. "Customers are navigating a highly volatile landscape. New technology means they have more choice, more power and more control than ever before. But at the same time, particularly in the developed economies, they are under enormous financial pressure."
In this new landscape, he argued, it was no longer enough to attract new shoppers; retailers would have to work "harder than ever" to earn and retain their custom, in part by harnessing the power of digital technology.
"Digital does not just offer smart new ways to shop," Clarke continued. "It gives us the opportunity for a warmer, more meaningful conversation with our customers, local communities, our colleagues and the suppliers who we work with."
The retail experience had to become more personalised, he suggested, pointing to Tesco's recent efforts to open 1,000 collection points for goods ordered online and revealing that the company has seen a 100 per cent increase in the number of internet-based orders placed via mobile devices.
"In this new world, retail will not be about buying large swathes of new real estate, but about how we, as businesses, relate to our customers, their communities and the countries in which we operate."
Controlling, sensitive and hungry for deals
Clarke went on to identify three major consumer trends that he believed would shape the retail landscape in the next few years: firstly, customers in developed and emerging economies would demand more control over their spending.
"In Asia and China, the wish for more control is fuelled by urbanisation," he said. "Many people eat out, but when they do eat at home they want the shopping trip to be quick, and the food to be ready to eat."
He added: "On top of that, as these economies grow more slowly, these consumers are also becoming more price sensitive. In Korea, for example, more than 70 per cent of customers have used a price comparison web site in the last six months."
Secondly, customers felt life was busier than ever. "Digital technology is a saviour, helping them lead simpler, easier lives. Smartphones help them researching deals."
Finally, customers wanted more for their money. "Retailers need to think more intelligently about how both we win and retain loyalty," Clarke noted. "Customers are looking for a better brand experience, and rewards for their loyalty that come on top of that."
As a result, consumers were far more likely to visit a retailer or buy goods sold under a brand that they had never considered purchasing before, he intimated.
More and more personal
Retailers, for their part, had to act across different channels and provide a more personalised experience.
"A personalised offer means retailers need to think and act in a multichannel way, not just delivering what consumers want today, but anticipating how we can meet their needs tomorrow," he said.
"By Christmas, one in five online orders in the UK are expected to be made on a mobile device. To make that experience easier and better for our customers, we're bringing together our existing apps into one.
"Then there's Click and Collect for grocery: in the UK we now have over 70 stores where customers can collect pre-ordered groceries. Meanwhile, we're rolling out our online offer in Ireland, the Czech Republic and Poland, into Bangkok, Shanghai and Budapest."
Clarke also confirmed that Tesco had adapted its strategy to store development, with new hypermarkets likely to be smaller in size.
"In Thailand, where the average number of visits per month to convenience stores has doubled in a decade, we are building more Express stores, offering more fresh meals (like green curry) and selling more doughnuts and muffins, as fewer Thais have traditional breakfast."
Tesco is also set to transform its offer in stores and satisfy growing demand for fresh, ready-to-eat meals, Clarke revealed, for example by offering UK consumers a 'food to go' offer that changes during the day.
"Breakfast lines include bread and croissants, granola and yoghurts; these are replaced by Tesco Finest salads, sandwiches, sushi and pizza slices at lunch time; giving way to ready meals and pies, whole pizzas and chickens in the evening."
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