Future challenges for retail need to be faced head on and embraced, believes one of New Zealand meat’s largest customers, the UK grocery giant Tesco. Suppliers can expect increased transparency, physical stores moving to become community hubs, further growth of digital technology and a focus on the social issues of food waste, food for healthy living and youth opportunities.
Seismic shifts in the way people shop, live their lives and what their expectations are of the companies they spend their money with require all retailers to look again at all aspects of how they serve their customers, according to Tesco’s chief marketing officer Matt Atkinson.
In a speech to the British Retail Consortium earlier this week, he outlined how technology is a key enabler that will enable the creation of the retailer of the future. He talked about the growth of online shopping, the introduction of Tesco’s drive-through grocery store and said that physical stores are best for the things you can’t do online.
“Our stores should be the hubs of the communities they service,” he said. “That means providing friendly personal service to those who shop with us and great counters offering genuine retail theatre.”
Customer loyalty, however, will be harder to retain, he maintains. “The digital age puts the customer in control – just being the nearest store to them is no longer enough.”
The breath of the Tesco business is a huge asset in this environment, he said, adding that Tesco Bank, for example, is not aiming to be the biggest bank in town, “but about being a trusted provider of great products and services to loyal consumers to loyal customers who are members of Clubcard and we can see that this reinforces their loyalty.
Tesco is now moving beyond selling film, music and books to Clubcard TV and the launch later this year of providing digital entertainment products in customers own homes blinkboxbooks and blinkboxmusic.
Creating the retailer of the future is about more than what we sell and the channels we use to sell it. It’s about how we behave as a business and our culture,” said Atkinson.
Transparency and openness will have to be at the heart of the way organisations like Tesco think. “Not just with customers, but suppliers, regulators, politicians, non-governmental organisations too – all the stakeholders interested in our business.”
Tesco is opening up its business, using digital technology, he said.
“When like many retailers we were affected by the discovery of horsemeat in four of our products earlier this year, we committed to more direct relationships with farmers. We have started the process of opening up our supply chain, so consumers can go online and find out exactly how their food is being made and what goes into it. Simple, honest, human – no spin, just an open dialogue with our customers.”
Perhaps the biggest opportunity for retailers in the future as “governments run out of money” is that they can be the “driving force for social change”, he said. He sees real social change in the future being about partnerships between business, government and the not-for-profit sector.
“As a major retailer Tesco can lead the positive change by harnessing our operational capabilities and working with our partners across the supply chain.”
Tesco has launched the Big 3: three major issues where the company believes it can use its scale for good on a global basis. These are: food waste, obesity and tools that enable healthy living, plus, and critically, creating opportunities for young people, said Atkinson.
“Making the types of changes I’m talking about isn’t always easy and can’t be done overnight. But, the scale and speed of change demands retailers move at pace. There will be challenges, but there is no option but to face them head on and embrace them.”