he current global economic and social uncertainty is a great source of opportunity for retailers with robust and decisive strategies that respond to the revolution in consumer behaviour. This was the clear message from the opening session of the 2008 World Retail Congress in Barcelona, where more than 1,100 top retail decision makers are gathering to discuss the sector’s response to global economic and consumer trends.
Giving the welcome address at the session entitled ‘Winning strategies to thrive during economic and social uncertainty’, Antonio Lucio, chief marketing officer, Visa Inc., said: “Consumers want anchors of certainty in an uncertain world and this gives us [the global retail sector] a big opportunity.”
Lucio said there were three things the retail sector can do to deliver this certainty: gain a deeper understanding of customer micro-trends; create brands that provide beacons for consumers; and enhance the retail experience. He said: “Working on micro-marketing under lighthouse brands and enhancing a meaningful consumer experience can create these anchors of certainty.”
Anders Dahlvig, president & CEO, IKEA Group, said: “The economic downturn is an opportunity not to be missed.” He said that internally, it was an opportunity to create motivation for efficiency measures and to become more focused commercially. Externally, it provided IKEA with the opportunity to distance themselves from the competition and to continue to invest in expansion.
Martin Wolf, chief economics commentator, Financial Times, provided a global economic context to the session: “We’ve been through a classic example of panic following an extraordinary credit boom”
He defined the current economic situation as a ‘classic Minsky moment’, quoting US Hyman Minsky’s adage that “Success breeds excess and excess breeds collapse.” He said that interest rates will remain low for the immediate future, the dollar is likely to remain weak, and the inflationary market is structurally less favourable, and also that we were “at the end of the period where America can act as the borrower and spender of last resort.”
Wolf added that a strong US recovery was unlikely before 2010 and that other developed countries remained vulnerable, but pointed out that while emerging markets should expect lower growth, this would be welcome where markets were overheating.
Paul R Charron, chairman emeritus of Liz Claiborne, said, “By the time the economy comes back, the US retail landscape is likely to have changed. The retailers that will thrive are those that successfully combine consumer understanding with retail operations.” He added that retailers will need to be more in touch with their consumers and more decisive in their strategies.
Jose Luis Duran, CEO of Carrefour, said: “This is no time for business as usual. Winning strategies will require the mobilisation of people, technology, partnerships and store networks.” He said there were five priorities for retailers: creating local brand leadership; product innovation; using technology smarter; using scale to build and protect supply; and working with local communities.
Duran gave examples of how Carrefour was responding to these priorities, including enhancing its range of own-brand products, its loyalty card scheme, and its work in sourcing local suppliers. He said that in China, for example, Carrefour works with 46,000 farmers to secure reliable sources of supply.
Dr Pei Liang, from the China Store Chain Franchises Group, said China faced the challenge of a market characterised by rapid development and price inflation. He added that rising store rents were providing a hurdle to retailers targeting the Chinese market, and that labour protection laws were leading to increases in the cost of employment. But he said the Chinese market is highly diverse, ranging from factory outlets to internet retailing, and that this diversity creates many opportunities.
The World Retail Congress is being held at the CCIB International Conference Centre in Barcelona from April 9 to 11, 2008. The Congress is organised by Emap Communications, with key sponsors including Visa, CBRE, Deloitte, Fujitsu and Oracle.
In total, more than one hundred of the world’s leading retail decision makers are speaking in the course of three days, including Patrick Bousquet-Chavanne, group president, The Estée Lauder Companies Inc., Anders Dahlvig, president and CEO, Ikea; Dr William Fung, group managing director, Li & Fung; Joe Gromek, president and CEO, Warnaco; Jón Ásgeir Jóhannesson, CEO, Baugur Group; Dr Lev Khasis, CEO, X5; Michael Luscombe, CEO, Woolworths Australia; Stefano Pessina, executive chairman, Alliance Boots Limited; James Stanway, senior director, Global Supply Chain Initiatives, Wal-Mart; Trudy Sullivan, president, Talbots; and Wu Jiangzhong, chairman, Wumart Stores Inc.
Issues ranging from the business of sustainability, to driving growth in international markets and the global customer revolution, all feature strongly on the 2008 Congress agenda.